The rupee continued its gains on Thursday, improving by another 0.35 per cent against the greenback in the interbank market, setting itself up to be the top performing currency across the world this month.

By closing time, the dollar stood at Rs287.74, according to the State Bank of Pakistan, depreciating by Rs1.01. The previous day, it closed at Rs288.75.

In the open market, the USD saw a Rs1.5 reduction against the rupee, and was going for Rs288.5, according to the Exchange Companies Association of Pakistan (ECAP). Yesterday, the dollar was trading for Rs290 in the open market.

“Today is also a good day for Pakistan’s economy. The dollar interbank rate went down by Rs1, and the open market by Rs1.50,” said Exchange Companies Association of Pakistan General Secretary Zafar Paracha.

He credited the continuing slide of the dollar to the army-backed crackdown on illegal outflows of foreign currency.

Paracha was optimistic that better days were coming. “Those who are keeping dollars should not continue doing so. People should trust their own currency over the dollar. The currency will get better,” he said, but cautioned that gold smuggling “remains an issue”.

The rupee has been appreciating for several weeks now, largely due to the military-backed crackdown on the illegal outflows of the dollar.

According to Khurram Schehzad, the chief executive of financial consultancy firm Alpha Beta Core, “Many leakages were happening through illegal channels of hawala and hundi trade from the open market,”

Speaking to Bloomberg, Schehzad said, “When the dollar rate reverses everybody — the hoarders, the exporters who are holding their export proceeds — start selling their dollars.”

The Bloomberg report said Pakistan’s rupee was set to become the top performer globally this month owing to the government crackdown on the illegal dollar trade.

According to the report, the rupee improved by almost 6pc in September, “a remarkable feat as most currencies including the Thai baht and South Korean won tumbled against the dollar on speculation US interest-rates will stay elevated for longer”.

Whether the trend will sustain is debatable.

Analyst Khurram Husain has highlighted in an op-ed that during the PDM government’s ‘crackdown’ of the exchange market amid dwindling dollar reserves, the rupee saw some gains, which were ultimately short term.

“That brief spell of stability ended with a bang in January this year because the underlying reality of too many rupees chasing too few dollars had not changed,” he writes.

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