Karachi/Manama- May 29: Bahraini Dinar (BHD) is trading at 744.79 Pakistani Rupee (PKR) as of now, with a stable exchange rate as per the current market statistics. This stability is the indication of a balance in economic indicators on both currencies and the reasoning behind their valuation as well as the implications for trade and investment.
Valuation Criteria
The foreign exchange rate of the Bahraini Dinar vis-à-vis PKR is influenced by a number of factors such as foreign exchange market supply and demand, economic stability, and monetary policies of Pakistan and Bahrain. The fixed exchange rate of the Bahraini Dinar relative to the U.S. dollar at 0.376 BHD per USD is supported by the strong oil-based economy of Bahrain and stable monetary system controlled by the Central Bank of Bahrain. This peg ensures low volatility against major currencies, indirectly stabilizing its rate against the PKR.
Conversely, the Pakistani Rupee has a managed float regime with interventions from the State Bank of Pakistan, inflation levels, and foreign exchange reserves. Pakistan’s economy, based on remittances, exports such as textiles, and foreign loans, is more volatile. The recent stability at 744.79 PKR/BHD indicates equilibrium trade flows and investor confidence in the short term, despite Pakistan’s economic instability, including inflation and external debt strain.
Economic Consequences
The fixed exchange rate has far-reaching consequences for the two countries. For Bahrain, a stable BHD-PKR rate is conducive to predictable cost of trade, especially of imports from Pakistan, including produce and textiles. Bahraini investors and Pakistani firms enjoying Bahraini investment benefit from lower currency risk, which creates confidence in international investment.
For Pakistan, the fixed rate ensures affordability of Bahraini imports, such as petroleum products and financial services, which are vital to its banking and energy sectors. Remittances from Bahrain-based Pakistani employees, another main source of foreign exchange, are also less sensitive to exchange rate fluctuations, which means there are consistent inflows for Pakistani consumers and the overall economy.
Yet, the exchange rate value of the Bahraini Dinar against the PKR reflects the purchasing power difference. One BHD fetches substantial PKR, which can put pressure on Pakistan’s import bill and trade balance if the PKR depreciates in the future. On the other hand, it makes Pakistani labor and goods competitive in Bahrain, which can increase exports and remittances.
Currency Introduction
The Bahraini Dinar (BHD), which was first introduced in 1965, is the Kingdom of Bahrain’s official currency, replacing the Gulf Rupee. It uses the symbol “BD” or “ب.د” and is further divided into 1,000 fils. High-value BHD is among the world’s strongest currencies, supported by Bahrain’s oil reserves and prudent economic policies.
The Pakistani Rupee (PKR), which was launched in 1948, is the currency of Pakistan, superseding the Indian Rupee. It is symbolized by the “₨” or “Rs” and divided into 100 paisa. PKR’s worth is determined by Pakistan’s diversified economy, such as agriculture, manufacturing, and services, and also by global commodity prices and IMF assistance.
