US dollar depreciates to Rs 92 on poorly-regulated markets as money exchangers dupe overseas Pakistanis in need to get their dollars exchanged
Pakistan Today has learnt that there are three different exchange rates prevailing on the dollar-hungry currency market. The interbank and open market rates being routine denominations for the foreign currencies to exchange hands, the “black market” rates, as an irritated customer put it, appear to be the ones through which the poorly-regulated money exchangers allegedly fleece their helpless customers.
Many if not all overseas Pakistanis find themselves in hot waters in the open market when the money exchangers refuse outright to accept some of their hard-earned foreign currency bills as mutilated, soiled and defective thus unfit for being surrendered to the banks.
“What would I do with these notes then?” exclaimed Shehzad Ahmed, an American citizen of Pakistani origin, showing $ 400 bills (of $100 denomination each) that the exchangers handed him back as rejected.
“They say take these back to America and spend them,” said a visibly irritated Ahmed, who is one of the several overseas Pakistanis who supported the ailing economy of their dollar-hungry motherland by remitting over $ 15.8 billion during the just-concluded FY2014.
Claiming to have visited almost all of the money exchange outlets situated at II Chundrigar Road, best known as Pakistan’s Wall Street, Ahmed was smelling a rat in the intentions of what he said profit-conscious money exchangers.
“Staff at Galaxy Exchange’s reception (near Shaheen Complex) offered me an exchange rate of Rs 92.50 rate for the rejected dollar bills,” he told Pakistan Today on July 18 when exchange rate for the greenback on the kerb market ranged between Rs 98.60 and Rs 98.87.
Unlike their colleagues at Shaheen Complex branch, the staffers at RubyCenter branch of Galaxy Exchange showed some “generosity” by offering Rs 95 as an exchange rate for the rejected currency notes.
Ahmed claimed to have no option but to sell his hard-earned money on, what he described it, the “black market” rate. As a customer copy of Galaxy’s receipt shows, the money dealers offered him Rs 98.87 for $ 2,600 and Rs 95 for the soiled bills worth $ 400.
To add to his suspicion, the money dealers made two separate receipts dividing the total amount ($ 3,000) into $ 2,000 and $ 1,000 using different client names. “They said a CNIC copy was required for transactions involving more than $ 2,000. I offered them the CNIC but they said it was not needed and divided the amount into two,” he told this scribe.
Ahmed, who has to work hard often as a salesman in Atlantic City of the American state of New Jersey to support his expanded family in Pakistan, suspected that the money dealers would sell his so-called “rejected” dollars on normal inflated rates to Pakistanis tending to go overseas.
“We buy such defected notes at Rs 95 and would sell them at Rs 96,” Hamid, a staffer at Galaxy Exchange, told Pakistan Today.
Shoaib Khokhra, chief executive of DD Exchange Company, explained that the banks did not accept foreign currency bills with even a slight defect. “The money exchangers then are compelled to turn to the vendors sitting on roadside in Bolton Market to lessen their losses,” he added.
Approving money exchangers’ rejection of soiled, mutilated and even stapled foreign currency notes, a senior central banker said there was no provision in State Bank of Pakisan (SBP) regulations allowing the currency dealers to use various exchange rates according to the condition of notes.
“We have to export these foreign currency bills and if soiled or even stapled the cost of their disposing off is higher,” the official told Pakistan Today.
The SBP official viewed Rs 92 exchange rate as “unreasonable” even for a defected bill saying, “The State Bank has not notified any such deflated rate for the unfit currency notes.”
To the SBP, disposable and non-issuable are the local currency notes that get dirty and limp (soft) due to humidity or constant change of hands, are torn, disfigured, partially cut damaged or slightly burnt provided three-fourth portion thereof be intact, divided into two pieces vertically or horizontally and those torn into more than two pieces.
“The unfit notes are the non-issuable/mutilated, soiled and defective/cut notes,” says the central bank.