In Pakistan, in the last 10 days, the dollar has depreciated by around 36 rupees in the open market, while the inter-bank currency has decreased by 7 rupees.
The value of the dollar has fallen sharply in the open market after the caretaker government clamped down on dollar smuggling and cracked down on illegal money exchange companies.
In a recent interview given to Independent Urdu regarding the devaluation of the dollar, caretaker federal information minister Murtaza Solangi said that ‘We have stopped speculation, hoarding and smuggling, the effects of which are visible. ‘
The question here is whether the value of the dollar will decrease further. And what should be done in this situation? In response to which Chairman of Exchange Companies Association of Pakistan Malik Bustan said that the price of dollar increased in Pakistan because nobody was trusting the rupee.
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In a conversation with Independent Urdu, he said that according to a recent Bloomberg report, the value of the dollar in Pakistan should be up to 250 rupees. A dollar is 78 rupees in India, 95 taka in Bangladesh and around 82 afghani in Afghanistan, where there are economic sanctions.
According to him: ‘Nobody in Pakistan trusted the rupee, so the value of the dollar increased. People were buying dollars to make easy profits.’
According to Malik Bustan, the main reason for the increase in the value of the dollar is ‘smuggling’ and if it is not ‘rooted out’, the dollar’s value will continue to decrease and increase because the demand is in place. Is.’
He said that they take dollars in exchange for the things that come from Afghanistan, so a local letter of credit (LC) will have to be opened with Afghanistan to reduce the demand, because ‘two to two and a half billion dollars in this country’ They go to (Afghanistan).’
On the other hand, economist and CEO of Credit Book Financial Services Amar Habib says that the dollar rate cannot be stopped. “If the demand for the dollar increases, the value of the dollar will increase.”
He further said that there is no room for further decline in the value of the dollar as the economic conditions are not much better. “The value of the dollar will only increase.”
Ammar Habib said that the increase in the value of the dollar was unnatural, which came down to curbing smuggling, but it will not depreciate further.
Will money exchange companies close?
The Central Bank of Pakistan announced reforms in the forex market last week, ordering major banks to set up separate exchanges for public foreign exchange transactions.
The State Bank in its press release said that various types of existing exchange companies and their franchises will be converted into a category of exchange companies with a defined mandate.
Apart from this, the minimum capital limit for exchange companies will be increased from Rs 20 crore to Rs 50 crore, according to the press release.
After these actions of the central bank, questions were raised about the future of exchange companies.
A man walks past the Money Exchange Company in Islamabad on July 10, 2023 (AFP)
In this regard, Malik Bostan said that money exchange companies are not closed and a meeting has also been held in this regard.
He further said that ‘there are exchange companies all over the world and seven hundred billion dollars come and go through exchange companies.’
While economist Ammar Habib said that ‘money exchange companies should not be closed, they need to be regulated, the State Bank is their regulator and if it does the right thing, there should be no such problems.’
He further said that ‘State Bank is now asking banks to buy and sell foreign currency over the counter, so things will improve.’
Economist Khaqan Najib was also spoken to in this regard, who said that administrative action was taken against dollar trading in the gray market, due to which the value of the dollar decreased. This action has to be continued to be maintained.
