Dealers allowed to sell 20% remittances

Decision likely to push down dollar rate in forex market

KARACHI:

Pakistan’s central bank has allowed currency dealers to sell up to 20% of workers’ remittances sent home by overseas Pakistanis to address the acute shortfall of US dollar in the open market, said the Exchange Companies Association of Pakistan (ECAP) on Thursday.

Earlier, the State Bank of Pakistan (SBP) had bound currency dealers to surrender 100% of workers’ remittances in the inter-bank market, leaving almost nothing with the dealers to sell to individual customers.

Speaking at a meeting chaired by SBP Governor Jameel Ahmed, ECAP President Malik Bostan revealed “Afghanistan’s government has issued a circular urging its citizens and traders to convert Pakistani currency available with them into US dollar and other foreign currencies”.

Afghan people are holding billions of rupees. “Their conversion into the US dollar has caused rupee’s devaluation, as the Afghans are converting the currency through Pakistani markets in border areas (across Durand Line),” he said, according to an ECAP statement.

The value of US dollar in Pakistani rupees is higher by Rs10-15 in border areas compared to the rate in Karachi. Hawala-Hundi (reference) system operators and smugglers are playing with Pakistani currency.

“Afghanistan is sucking around $2 billion a month from Pakistan’s reserves,” he added.

Meanwhile, Pakistani currency maintained its downturn for the second consecutive working day as it fell by 0.23% (or Rs0.52) to close at Rs221.95 against the US dollar in the inter-bank market.

Published in The Express Tribune, November 4^th, 2022.

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