The Pakistani rupee is showing strong signs of continuing its robust climb after easily surpassing the much-discussed resistance level of Rs. 285 against the US dollar on Wednesday to reach a fresh three-month high in the inter-bank market.
According to data from the central bank, the rupee recorded further gains of 0.37%, or Rs1.04, and reached Rs284.68 against the dollar, continuing its winning streak for the 20th straight working day.
The caretaker government’s efforts to stop foreign currency leaks within the Afghan Transit Trade (ATT) mechanism led to a variety of other steps that helped the currency rise even further.
The interim administration took urgent action on Tuesday to stop the harm done to Afghanistan’s economy and external sector as a result of the misuse of ATT by prohibiting the import of smuggling-prone products across its territory and tightening the import regulation.
The rupee has collectively recovered 7.84%, or Rs22.32, over the past 20 days as a result of a crackdown on illegal currency merchants and smugglers, the supply of foreign currencies has remained larger than the demand in the nation.
Exporters were encouraged to sell their dollar proceeds in advance on futures exchanges in order to avoid potential losses caused by the rupee’s steady upward trend as a result of the tough measures taken against illegal operations.
Similar to this, Pakistanis living abroad are sending more money home through authorized channels like banks and exchange businesses, which has increased foreign currency flows relative to demand.
Previously, on September 5, 2023, the rupee fell to a record low of Rs307.10/$ as a result of inadequate government enforcement of laws against currency smuggling and the Hawala-Hundi network.
According to the Exchange Companies Association of Pakistan, the currency rose 0.35%, or Rs1, to close at Rs285/$ on Wednesday.
As a result, the disparity in exchange rates between the two markets decreased to within the International Monetary Fund’s (IMF) suggested upper limit of 1.25%. The difference had increased to almost 10% a month earlier.
When compared to their need for import payments, officials in the caretaker government noticed that foreign currency inflows from export revenues and worker remittances were higher.
However, the supply-demand equilibrium in local markets was being thrown off due to the loss of foreign money caused by under- or over-invoicing under ATT. The government has now acted quickly to stop leaks.
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