ISLAMABAD: An ongoing clampdown on illegal foreign exchange trade in grey and black markets by security agencies has so far yielded up to $900 million surplus in the open market, which has been deposited in banks, currency dealers said this week.
Pakistan’s rupee has gained over 6.1 percent against the dollar so far in September, making up for all of the rupee’s losses in August and technically becoming the best-performing currency in the world last month.
The rupee hit a record low of 307.1 against the dollar on Sept. 5 but has made a sharp recovery since the country’s financial regulator and security agencies began taking action the next day to curb black market operations.
The crackdown on black market operators against the informal market has resulted in tens of millions of dollars pouring back into Pakistan’s interbank and open markets, dealers say.
“We have deposited an estimated $800 to $900 million in the banks since the crackdown started in September showing highly appreciable results,” Zafar Paracha, General Secretary of the Exchange Companies Association of Pakistan (ECAP), told media on Monday.
As a direct outcome of the crackdown, the daily average trading volume of exchange companies had expanded to $50 million from $5-$7 million earlier.
“We are selling up to $40 million per day to the banks while inflows from overseas Pakistanis are also unprecedented … Remittances being channelled through the exchange companies have increased by 10 to 15 percent and surely inflows through banks would also rise,” Paracha added.
The central bank held $7.6 billion in reserves till Sept. 28.
The central bank on Monday reported that the dollar remained under pressure and lost another Rs1.04 to close at Rs281.65 from Rs282.69 the day before.
A market-determined exchange rate is a key condition for Pakistan receiving a $3 billion bailout loan from the International Monetary Fund (IMF) that was agreed in July to help avert a sovereign default.
While there have been other attempts to curb the black market when the rupee has been under stress, the latest push came after licensed dealers requested army chief General Asim Munir to take action, rather than leave it solely to the civilian caretaker government that was put in place in August to run Pakistan till elections, currently expected to be held early next year.