Rupee free fall disgruntles businessmen

Blame exchange companies for orchestrating ‘dollar racket’

Usman Hanif January 27, 2023


Irked by the hike in dollar value against the rupee, the business community on Thursday urged the government to come up with a long-term solution.

The rupee continued its downward trajectory with a new low against the greenback, depre- ciating by Rs24.53 to close at Rs255.43, down 9.61% on a day-on-day basis, the highest single-day decline and second highest in percentage terms, according to Arif Habib Limited (AHL).

Speaking to The Express Tribune, Pakistan Business Forum (PBF) Vice President Ahmad Jawad said, “How could the rupee depreciate by Rs25 against the dollar in one day?” Dubbing the depreciation ‘an artificial and unprecedented increase of the US dollar in the inter-bank rate’ and questioning the criteria on which the State Bank of Pakistan (SBP) took this step he said, “This is a disaster for the economy and will result in inflation rising even more.

Union of Small and Medium Enterprises (UNISAME) President Zulfikar Thaver declared that the exchange companies and big mafias were behind dollar conundrum. “They trade in dollars with black money to make huge profits and then hoard the currency to create demand for it. They have made it a parallel currency,” he lamented.

He was of a view that many currency exchange dealers have sub-agents who do extensive business under the same license. “Most of these sub-agents, however, do very little for their principal employers and instead have their own side-business in which they quietly pick up dollars and keep them in secret lockers,” he said.

Urging the government to take notice of the exchange companies ‘responsible for this entire racket’ he said, “Millions of dollars exchanged hands without any biometrics or memos. Many of the customers were Afghans who are responsible for smuggling and cross border illegal trade – and they were welcomed as big customers at our local money exchangers. These illegal dealers will always keep creating a shortage, hoarding and making huge profits until the government takes notice.”

The PBF VP added that, “It looks like the government is ready to meet all the IMF’s demands to revive the loan programme – this will result in new taxes being imposed on the industry and the masses.”

“PBF had predicted earlier that the currency would further depreciate – now I think we are likely to touch an annual inflation rate of 30% in 2023,” predicted Jawad.

Not everyone in the business community shared the same views. SITE Association of Industries (SAI) President Riaz Uddin was of the view that it was a good thing that the SBP had decided to allow the rupee to find its real value against the dollar.

“Now the SBP should further streamline by specifying the HS code-wise list of essential items and provide a framework for self funded imports as promised by the SBP governor. They should not intervene with the forex anymore, he said.

The PBF VP, however, thought the problem behind the economic crisis was a flawed economic formula.

“Unfortunately, Pakistan’s formula for economic growth is as flawed as it gets; borrow foreign currency-denominated loans, build some large-scale infrastructure, get a minor growth spurt in the process, and wait until this growth spurt fades so we can repeat the process again,” said Jawad.

“Our economic failure is a symptom of our collective political choices. Once we can allocate political power more fairly, we can make better economic outcomes,” he said.


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