Pakistani Currency Named The Best Currency In World After First Quarter Of 2021
Nearly about $500 million inflows from the International Monetary Fund (IMF) and a Eurobond issue of $2.5 billion have made Pakistani rupee strong enough to a point that it is now leading the list of best currencies performing against dollar.
The Pakistani Rupee has appreciated nearly 4.36% to Rs152.60 against a much ordinary greenback keeping perspective of the year to date data in analysis. Thus the official currency of Pakistan has came on top to become as Asia’s best performing currency since the opening level of January 1, 2021.
According to the sources reporting inside from the State Bank of Pakistan, foreign exchange reserves held by the bank alleviated by 2.1 percent across the week. The reserves held by the SBP on March 19, 2021 were recorded at $13,295 million, indicating it is up by more than $270 million compared with $13,019 million before this date.
Data released by Bloomberg stated that the Pakistani rupee top listed, followed by the Canadian dollar that stood at the second position among the top-performing currency globally.
Mr. Muzammil Aslam, CEO of Tangent Capital quoted the Bloomberg data in the latest tweet. The Pakistani rupee has been the world’s best currency against the US dollar from January 1 to March 31, he wrote in the tweet:
“PkR has been the World best currency against USD from January 1st to March 31st. It is good to celebrate but equally concern to maintain the competitiveness. I’m on for gradual changes than abrupt. @StateBank_Pak”
Interestingly, as the US Dollar is trading lower versus the Rupee; however, it is trading firmly higher versus its major peers. The US Dollar Index which measures the greenback versus a basket of 6 majors, trades +0.2% at 93.11 as it continues to trade at 4 month highs.
This feat was achieved by the Pakistani rupee also because of the aid of foreign remittances inflows and comparatively quite low outflows of foreign currency during the period of the pandemic starting from a year ago.
Previous week, the dollar slipped to a 21 month low of Rupees 151.50, that was last witnessed on June 11, 2019, before starting rebounding. The lowest trade recorded so far in this first quarter was at strikingly at Rupees 151.75.
This appreciation of Pakistani rupee and the falling dollar rates has created a curious environment of both debate and comments in order to ascertain the causes that are involved in to the rally of Pakistani rupee against dollar, and how long it could go on? The country’s financial sector believes that the rupee is not gaining because of economic strength behind it but largely due to the fact of higher inflows of dollars injected into the system, and reduced demand for the currency in both the interbank and open market all year long.
Atif Ahmed, a local market currency dealer in the interbank market said, “The inflows–as approved by the IMF, the World Bank and the Asian Development Bank–have created a positive sentiment for the local currency which means the dollar would have to lose more in the coming weeks. These inflows are in the pipeline but are enough to influence the currency market sentiment and will keep the rupee on the higher side in the coming weeks,”
The main causes for the slide of the US dollar against the rupee were the current foreign currency account surplus coupled with very low public sector consumption which maintained the reserves high. These causes are strongly believed in apart from the addition to the higher inflows by the majority of bankers, currency dealers and market analysts in general.
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