According to a report released yesterday, the Pakistani currency, due to its outstanding performance in the month of September, has surpassed currencies from around the world and proudly adorned itself with the title of the best-performing currency. There is much debate about what caused this sudden turn of events.
However, according to the report, it was the result of illegal dollar trading, smuggling, and speculation crackdown, effective regulatory measures, and reforms in the State Bank. Regardless of the reason, it has provided a momentary breath of fresh air to the ailing economy to some extent.
Those who are aware know that in the current era, the performance of the dollar in the economic and political landscape, both globally and locally, is a stark reality. The dollar, as the benchmark currency on the currency scoreboards of all nations, is evaluated and compared against other currencies, and its strength and influence are assessed and determined by various institutions and countries.
As a consequence of this global dollar dominance, every country is forced to align the value of its currency with the dollar or in its vicinity. Particularly for developing and economically vulnerable countries like Pakistan, maintaining a competitive edge in global trade becomes challenging when the value of their currency falls against the dollar.
Pakistan’s economy has been struggling with severe economic challenges, instability, and crises for a long time. As a result, Pakistan is indebted to several international institutions and friendly countries, including the IMF and the World Bank. This web of loans is also heavily tied to the dollar, just like global trade, and Pakistan has to pay various financial obligations in dollars internally, causing instability in the local currency’s value and even affecting the repayment of foreign debt with interest.
In recent times, the exchange rate battle between the dollar and the rupee has taken a dangerous and serious turn. The dollar had severely devalued the rupee and had seemingly left the rupee without any means of competition and resistance. It appeared as if the dollar had left itself at the mercy of circumstances.
While the volatility of the dollar and the worst performance of the rupee have been ongoing for some time, the dismissal of the Imran Khan government and the subsequent arrival of a new government saw a significant surge in the dollar’s volatility and a rapid decline in the rupee’s value.
During the tenure of the PTI-led government, the dollar’s value continued to rise at a rapid pace. However, the main reason for the downfall was the government’s failure to control the economy effectively. Nevertheless, instead of addressing the issue, the government continued to rely on increasing loans and artificial inflation in foreign exchange reserves, which was a prerequisite for a deal with the IMF. However, the lack of actions to control the dollar and stabilize the economy made this policy extremely detrimental to the country and the nation, and the economy continued to deteriorate.
During this government’s tenure, continuous reports were circulating that dollars were being smuggled out of Pakistan to Afghanistan. However, these reports did not receive any attention from the government, and all efforts were made to secure more loans and artificially boost foreign exchange reserves while ignoring the issue of controlling the dollar. As a result, this policy proved extremely destructive for the country and the nation, and the economy suffered greatly.
As a consequence of this policy, the country was saved from default in an official and formal sense, but the eruption of public anger continued, and the cycle of public anger is still ongoing.
This report is a hopeful and encouraging sign that the Pakistani currency has achieved the honor of being the best-performing currency in the world in the month of September. However, this report and the stability of the national currency contain hidden lessons. It is evident that the severe mismanagement of the national currency was the result of extreme negligence and lawlessness.
It is clear that the dollar’s black market, smuggling, and hoarding were thriving, and regulatory authorities were reluctant to take any action. Consequently, the entire economy was severely tested. Today, stringent measures have been taken, especially when the army chief took action in this regard, and all those illegal channels where the dollar was being smuggled have started to close down. The result is that the rupee is now stabilizing, and the benefits of a stable rupee will soon be apparent if it continues to remain stable.
It is necessary to hold accountable those in the administration who, due to their negligence, became accomplices in severe losses for the country and the nation, so that no one dares to play with the national economy through illegal means in the future.
