The Chairman of the Exchange Companies Association of Pakistan (ECAP), Malik Bostan, expressed optimism about the prospective boost in the country’s remittances by 10-20% following the government’s recent actions against dollar hoarders, black marketeers, and smugglers. In an interview, Bostan revealed that daily acquisitions by foreign exchange companies have surged by 200%, from $5 million to $15 million, owing to the crackdown. Moreover, he noted a significant reduction in the interbank and open market dollar rate, which currently hovers around Rs295, with predictions of it dropping below Rs250 if the crackdown persists.
Exposing Illicit Networks and Impacts on the Economy
The initiative has unveiled a colluding network involving black marketeers and banking personnel, who facilitated hawala/hundi transactions using dollars stored in bank lockers. Bostan disclosed that these corrupt practices, orchestrated through messages from the black market operators, involved the illegal trading of US dollars. This operation has tarnished many importers and exporters, fostering a trend of over-invoicing and under-invoicing to further the illegal dollar trade. This illicit activity adversely affects Pakistan’s foreign exchange reserves by enabling the export of dollars through inflated invoices and the retention of a significant portion of foreign banks by under-invoicing exporters.
The ECAP Chairman emphasized that curbing all forms of illegal dollar trade permanently would augment Pakistan’s foreign exchange reserves, referring to the considerable amounts of dollars recovered and deposited into the nation’s interbank and open markets since the crackdown on September 6. He noted the recovery of the Pakistani rupee from record lows earlier this month to Rs295 and Rs296 in the interbank and open markets, respectively. As per Bostan, this recovery trajectory is likely to endure provided the stern action against illegal US dollar trade continues.
Bostan acknowledged having urged Army Chief General Asim Munir to initiate action against the involved entities, highlighting the prevailing dependency on black market dealers before the crackdown commenced. Several FIRs have been filed against the banking staff implicated in these illicit transactions, marking a decisive step towards dismantling Pakistan’s illegal dollar trading network.
