Why Has the Pakistani Rupee Gained Against the Dollar? A Look at the Factors Behind the Change
In last months, the Pakistani Rupee (PKR) has shown signs of recovery against the US Dollar (USD), surprising many experts and everyday citizens. After a long period of devaluation, the rupee is slowly gaining strength. But why is this happening? Here’s a simple look at the key reasons behind this positive change.
1. Increase in Foreign Remittances
One major reason is the rise in money sent home by overseas Pakistanis. More remittances mean more dollars entering Pakistan, which boosts the supply of foreign currency and helps strengthen the rupee.
2. Strict Action Against Dollar Smuggling
The government and the State Bank of Pakistan (SBP) have taken strong steps to control illegal dollar trading and smuggling. Crackdowns on hawala/hundi systems have reduced the black market’s impact and brought more transparency to currency exchange.
3. Stable Political Environment
After months of uncertainty, Pakistan has seen a relatively stable political situation. Political stability increases investor confidence, which helps strengthen the local currency.
4. Improved Current Account Balance
Pakistan’s current account deficit has narrowed due to lower imports & higher exports. A better trade balance means less pressure on foreign reserves and more stability for the rupee.
5. Inflows from International Lenders
Pakistan has received financial support from global institutions like the IMF, World Bank, and friendly countries. These inflows add to the country’s foreign exchange reserves, giving strength to the rupee.
6. Tight Monetary Policy by SBP
The State Bank of Pakistan has kept interest rates high to control inflation. This has attracted some foreign investment in government bonds and helped maintain a stable exchange rate.
Final Thoughts
While the rise of the Pakistani Rupee is a good sign, experts warn that the improvement must be supported by long-term economic reforms. Sustainable growth, increased exports, and strong governance will be needed to keep the rupee stable in the future.