Strengthening more than 4 percent against the US dollar, the Pakistani rupee has been termed as the world’s best currency during the first three months of 2021, according to the reports published by leading media outlets. However, analysts have warned against sharp currency movements.
“PKR has been the world’s best currency against USD from January 1st to March 31st,” said Tangent Capital CEO Muzammil Aslam in a tweet citing Bloomberg data.
With the local unit appreciating 3 percent in March, the Pakistani rupee not only outperformed numerous global currencies but also became one of the four currencies to have gained against the greenback during the first quarter of the year.
“It’s good to celebrate but it’s equally [a matter of] concern to maintain competitiveness. I’m for gradual changes than abrupt,” Aslam added. “The sudden fluctuations in the currency don’t give a good signal to the markets and businesses.”
The Canadian dollar strengthened 1.09 percent against the dollar in the first quarter, whereas the British pound sterling rose 0.64 percent. On the other hand, the Norwegian krone appreciated 0.23 percent while Saudi Riyal rose 0.03 percent. Meanwhile, Pakistani currency appreciated 4.09 percent.
How Did Pakistani Rupee Strengthen Against Dollar in 2021?
The excessive inflow of US dollars can be attributed to the recent upsurge of Pakistan currency in the international market.
As per the reports, the rupee began trading under 153 in the interbank market after Pakistan received the latest tranche of $498.7 million from the International Monetary Fund (IMF) under the Extended Fund Facility.
The issuance of dollar-denominated Eurobond by Pakistan, which was oversubscribed by almost two times after receiving a positive response from investors, also raised a total of $5.3 billion in combined orders, further acting as a stimulus to support the local currency.
The additional inflows from overseas Pakistani in form of remittances through Roshan Digital Account into different assets like Naya Pakistan Certificates, real estate and the stock market also aided in the rise of the Pakistan currency rate. Roshan Digital Account has received more than $500 million deposits during the last five months.
“The rupee has been appreciating versus the dollar due to the lack of dollar demand led by reduced smuggling,” Aslam explained further, according to a local English Daily. “In the market-based exchange rate system, the currency is influenced by the demand and supply conditions, so, the rupee is expected to be stable in the times to come subject to repayments requirements.”
The reduced outflow of the dollar due to global lockdown and stringent travel restriction amid the COVID-19 pandemic also played a substantial role in aiding the Pakistan currency exchange rate, as it resulted in lower smuggling and trade of the US dollar in the international market.
It is worth mentioning that the US dollar hit a 22-month low of PKR 151.50 on March 31, 2021, marking the end of the first quarter of the year.
On a side note, if you are an overseas Pakistani looking to invest in the country, here are a few guides that you may find helpful.
- Frequently Asked Questions about Roshan Digital Accounts
- Raast – Pakistan’s First Instant Digital Payment System
- List Of The Best Banks For Overseas Pakistanis
- Here is How the Government is Facilitating Overseas Pakistanis
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