In a positive development for Pakistan’s economy, the Pakistani Rupee is anticipated to make a strong recovery against the US Dollar, with expectations of reaching a rate of 250 against the dollar, according to Malik Bostan, Chairman of the Exchange Companies Association of Pakistan (ECAP). This optimism is rooted in the recent crackdown by the government against hoarders, black marketeers, and smugglers of dollars.
Bostan highlighted the remarkable impact of the crackdown, revealing that foreign exchange companies, which previously received approximately $5 million per day, are now receiving $15 million per day, representing a substantial 200% increase. This surge in remittances has led to a significant decrease in both the interbank and open market dollar rates, which currently stand at around Rs295. Bostan assured that if the crackdown persists, the dollar could drop below Rs250.
Moreover, Bostan disclosed a disconcerting revelation regarding the nexus between black marketeers and certain banking staff. He asserted that a substantial amount of dollars had been concealed in bank lockers, with corrupt bank employees collaborating with black market operators in illegal hawala/hundi transactions. This illicit activity has resulted in several FIRs being filed against implicated bankers.
Bostan also shed light on the detrimental impact of the illegal dollar trade on importers and exporters. Importers engage in over-invoicing to transfer more dollars abroad, while exporters resort to under-invoicing, thereby leaving a significant portion of their dollars in foreign banks. This practice has taken a toll on Pakistan’s foreign exchange reserves.
Highlighting the issue of dollar smuggling to Afghanistan, Bostan emphasized the importance of maintaining rigorous surveillance over all forms of illegal dollar trading to bolster Pakistan’s foreign exchange reserves.
Following the crackdown, initiated on September 6 after a push from military leadership, a substantial amount of dollars has already been injected into Pakistan’s interbank and open markets. As a result, the Pakistani Rupee, which had plummeted to record lows of Rs308 in the interbank market and beyond Rs330 in the open market earlier this month, is showing signs of recovery, currently standing at Rs295 in the interbank and Rs296 in the open market. This positive trend is expected to persist as long as the crackdown against the illegal trade of US dollars remains effective.
Bostan concluded by revealing that he had appealed to Army Chief General Asim Munir to take decisive action against hoarders, black marketeers, and smugglers of dollars, redirecting the majority of people from black market dealers towards the formal exchange channels. This concerted effort is anticipated to not only stabilize the currency but also strengthen Pakistan’s overall economic outlook.