The Chairman of the Exchange Companies Association of Pakistan (ECAP), Malik Bostan, is optimistic that the country’s remittances may increase by 10-20% due to the government’s crackdown against hoarders, black marketeers, and dollar smugglers.
Bostan revealed that foreign exchange companies, which were previously receiving around $5 million per day, are now getting $15 million per day, representing a 200% increase. As a result of this crackdown, the interbank and open market dollar rates have significantly decreased and now stand around Rs295, with the potential to drop below Rs250 if the crackdown continues.
The intensified crackdown has also exposed a connection between black marketeers and banking staff. Bostan disclosed that a substantial amount of dollars was hidden in bank lockers, and corrupt bank staff members collaborated with black market operators to engage in illegal hawala/hundi trading of US dollars. Several FIRs have been registered against the bankers involved in these illicit activities.
Furthermore, Bostan highlighted how illegal dollar trading has corrupted importers and exporters. Some importers engage in over-invoicing to send more dollars abroad, while exporters resort to under-invoicing to retain a significant portion of their dollars in foreign banks. This practice negatively impacts Pakistan’s foreign exchange reserves.
Bostan also emphasized the smuggling of dollars to Afghanistan and underscored the importance of continuous monitoring and action against illegal dollar trading in various forms to bolster Pakistan’s foreign exchange reserves.
The crackdown, initiated after a push from the military leadership on September 6, has already led to the deposition of tens of millions of dollars into Pakistan’s interbank and open markets. Consequently, the Pakistani rupee, which had reached record lows, is now recovering, standing at Rs295 in the interbank and Rs296 in the open market.
This positive trend is expected to continue as long as the crackdown on illegal dollar trade persists. Malik Bostan had previously urged Army Chief General Asim Munir to take action against hoarders, black market operators, and dollar smugglers. Prior to the crackdown, a significant number of people turned to the black market for their foreign exchange needs.
