Pakistan’s Rupee Rebound: Factors And Future – OpEd


n a surprising turn of events, the Pakistani rupee (PKR) has not only bounced back from its all-time low but has also emerged as the world’s top-performing currency. This remarkable turnaround, which saw the PKR plummet to a record low of 307 rupees against the US dollar in early September, has been attributed to a government crackdown on illicit dollar trading. In a span of just a few weeks, the PKR has appreciated by over 8%, trading at 275 against the dollar, outperforming all other global currencies. This article delves into the factors behind this resurgence and what lies ahead for Pakistan’s economy.

The PKR’s recent surge stands in stark contrast to its dismal performance a few weeks ago. The root cause of the rupee’s downfall was the prevalence of an illegal dollar trade that had a significant impact on its exchange rate. However, the government’s decisive actions have curbed this illicit trade, leading to a revival of the rupee’s fortunes. It’s worth noting that trials in eight out of nine cases related to the illegal dollar trade have concluded, rendering further proceedings unnecessary.

Analyst Insights

HDFC Securities, in a recent report, acknowledged Pakistan’s rupee as the top global performer for the month, crediting the government’s crackdown on illegal dollar trading for this feat. This performance is especially noteworthy given that other currencies, such as the Thai baht and South Korean won, have faced setbacks against the US dollar. The assumption that US interest rates will remain elevated has put pressure on these currencies, making Pakistan’s rupee’s resilience even more remarkable.

Tahir Abbas, head of research at securities brokerage firm Arif Habib Limited, expressed optimism regarding the PKR’s future prospects. He believes that the currency will continue to strengthen, provided the government persists in its crackdown on illicit dollar trading and enforces the state policy. Additionally, Abbas highlights the importance of focusing on exports and attracting foreign direct investments (FDI) to stimulate the demand for the PKR and bolster its exchange rate.

Pakistan’s economy has been grappling with severe issues, such as crippling debt and dwindling foreign reserves. The World Bank estimates a contraction in Pakistan’s real GDP for the fiscal year ending in 2023, marking a significant reversal from the 6.1% growth witnessed the previous year. High inflation is another concern, with Pakistan experiencing multi-decade-high headline inflation, driven by various factors, including the weakness of the PKR.

The PKR’s exchange rate is closely linked to inflation in Pakistan. Rising costs can erode the purchasing power of the currency, which, in turn, exacerbates inflationary pressures. However, with the PKR strengthening, experts predict that the nation’s Consumer Price Index (CPI) will eventually ease, albeit with some lag. Professor Hanke echoes this view, suggesting that a stronger rupee will help alleviate inflationary pressures in Pakistan.

While the PKR has taken the lead as the world’s best-performing currency, it’s essential to recognize the strong performance of other currencies. For instance, the Mauritiun rupee emerged as the second-best performing currency, strengthening by 0.7% against the US dollar in September. Similarly, the Hong Kong dollar secured the third position, with a 0.2% increase in the same month. These performances provide a broader perspective on global currency trends.


Pakistan’s rupee has achieved an impressive turnaround, transforming from an all-time low to the world’s top-performing currency. This resurgence is primarily attributed to the government’s crackdown on illicit dollar trading, which has helped restore confidence in the PKR. While this recovery is a positive sign for Pakistan’s economy, challenges persist. Crippling debt, dwindling foreign reserves, and high inflation continue to weigh on the nation’s economic outlook. The PKR’s impact on inflation is a significant consideration, as its strength can help mitigate rising costs and ultimately ease inflationary pressures. While Pakistan’s economy has struggled in recent times, this rupee rebound offers a glimmer of hope for a more stable and prosperous future. Hence, the PKR’s impressive performance should not only be celebrated but also serve as a catalyst for broader economic reforms and measures to ensure a sustainable and robust recovery for Pakistan’s economy. 

Khalid Iqbal

Khalid Iqbal is a BS student at NUML, Islamabad.

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