Here’s Why Afghanistan Currency is Stronger than Pakistan’s Currency:
The economic crisis in Pakistan is being worsened by a significant outflow of foreign currency from the country, primarily through the smuggling of large sums of US Dollars into neighboring Afghanistan on a daily basis. This alarming situation has further ramifications for Pakistan’s economy.
As a result of these illicit financial outflows, the Afghan Afghani (AFN) has become one of the best-performing currencies globally over the past year, while the Pakistani Rupee (PKR) has experienced a decline, placing it among the worst-performing currencies. This exacerbates the economic challenges Pakistan is already facing and contributes to a shortage of foreign currency reserves, adding strain to the fragile economy.
Moreover, the outflows have had a significant impact on the exchange rate between the Afghan Afghani and the Pakistani Rupee. Currently, 1 Afghan Afghani is equivalent to approximately 3.28 Pakistani Rupees, highlighting the significant contrast in their respective performances. Bloomberg’s report suggests that these unauthorized currency flows are providing crucial support to the struggling Afghan economy.
The influx of US Dollars, which have been denied to the Taliban regime by the United States and Europe, has provided substantial relief to Afghanistan’s financial situation. Despite facing international sanctions and restrictions, Afghanistan has witnessed a strengthening of its currency, offering some stability amid challenging circumstances.
Addressing currency smuggling and foreign currency outflows is a pressing concern for Pakistan as it grapples with its economic challenges. The authorities are actively taking steps to combat these illicit practices by implementing stricter regulations and increasing surveillance at border crossings. The aim is to curb the unauthorized movement of funds, preserve foreign currency reserves, and stabilize the Pakistani Rupee.
Efforts are also underway to tackle the root causes of the currency disparity. These include improving economic conditions within Pakistan, creating a favorable business environment, and attracting foreign investment. By bolstering economic growth and ensuring stability, the government seeks to reduce the incentives for currency smuggling and promote a more balanced exchange rate.