To stop the rising dollar value in the open market from reaching Rs. 317, the caretaker government on Thursday devised a plan to crack down on unregistered foreign currency exchanges.
However, this strategy may draw attention away from the real causes of the issue.
Caretaker FM Decision
Caretaker Finance Minister Dr. Shamshad Akhtar requested a clear action plan to deal with the smuggling of dollars, which was cited as one of the causes of the dollar’s price increase, during a preliminary meeting on the currency’s increasing price.
This week, sources claim that the central bank also bought a minor number of dollars on the open market.
On the day that the parity between the rupee and the dollar in interbank trade surpassed Rs. 300, the decision to crack down on the exchanges was made.
Smuggling of Dollars
Due to imports, the dollarization of the economy, smuggling, and funding of Afghanistan’s imports, a threshold was crossed for the first time in Pakistan’s history.
According to officials who were privy to the discussions, participants in the joint working group meeting included representatives from the State Bank of Pakistan (SBP), Ministry of Finance, Federal Investigation Agency (FIA), Intelligence and Investigation (I&I) Customs, as well as officers from intelligence agencies.
After the meeting, the Ministry of Finance didn’t formally issue a statement.
There was no clear path for dealing with the currency exchange market issue, which would soon convert into another wave of inflation.
According to sources, there was a blame game, and certain cosmetic steps were agreed upon as a remedy to the problem.
The FIA and other law enforcement authorities have been unable to put an obstacle to the smuggling.
The role of foreign exchanges merchants in smuggling was also highlighted at the discussion.
Unauthorized currency exchange dealers, according to central bank officials, were responsible for dollar smuggling and should be prosecuted.
The FIA decided to take action against the illegal sellers.
FIA Previous Steps To Stop Smuggling of Dollars
Previously, the FIA adopted similar efforts, but they did not provide the desired outcomes.
The central bank informed attendees that over 50 licensed exchanges with over 500 branches were functioning throughout Pakistan.
The country’s official foreign currency reserves decreased to $7.93 billion last week, from almost $5 billion in new loans in July.
Pakistan’s law enforcement agencies have failed to stop the smuggling of cash to Afghanistan, which has been done in collusion with the law enforcement agencies and utilizing boxes of oranges.
State institutions appear to have failed to protect borders and international airports, which have become smuggling hotspots.
The central bank also reduced the outgoing flow of the dollar to $5,000 per person, which caused problems for the people but did not help to reduce the outflow.
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