Black marketing of greenback almost wiped out throughout the country, experts
The Panama Leaks have also dented Pakistan’s Kerb market as its demand suddenly dropped by almost 70 per cent in the last 30 days, while the traders who were doing black marketing of greenback in Peshawar and Quetta have disappeared from the markets.
Peshawar and Quetta was considered to be the second largest market of the greenback since the Afghan-War after Karachi and Lahore but the demand of the dollar in both cities has dropped significantly during the last month or so.
“The total size of cash trade including Greenback in open currency market is around $20 million in all the provinces,” said Malik Bostan, President Pakistan Forex Association(PFA). “Half of the amount is traded in other currencies — including Pakistani rupee, while $8-10 million of the US dollar are traded every day.”
Six week ago, he said, a routine demand of greenback in Peshawar was around $4-5 million per day, but now it has shrunk to only $1 million. It means that people who were black marketing of the dollar in KP have suddenly disappeared since the release of the Panama Papers.
Similar situation prevails in Quetta (Balochistan) where the demand has shrunk to below $1 million from $2-$3 million six weeks ago.
Earlier, the perception was that the people from Afghanistan were buying up foreign currencies including the dollar from Peshawar and Quetta to meet their country’s requirement. Sources said that the Afghan nationals were buying the dollar and other currencies from Peshawar and Quetta and were selling these currencies in their country as the prices of dollar and other currencies were higher in Afghanistan compared to Pakistan.
In Peshawar and Quetta, the dollar is being traded below the rates of Karachi and Lahore. Earlier the price trend was up in both border cities. The source said that if the situation persists in future, the dollar may slide further below Rs 105 in the open currency market.
“The Exchange Companies cannot transfer a single dollar from Pakistan to another country without permission of the State Bank, while a foreign currency account holders can transfer millions of dollar abroad without any approval,” said Zafar Paracha, Secretary Exchange Companies of Pakistan (ECAP) in an interview with Pakistan Today.
During the last few years, the rupee-dollar parity between Interbank and Kerb markets was around Rs 1.50 to Rs 2.00, but now it has shrunk to a mere 30-35 paisas as the greenback is being traded at Rs 105.05 for buying in open market in the absence of demand and Rs 104.75 and Rs 104.78 in the interbank market.
An analyst of a brokerage house said that the greenback is stable in the interbank market for the last six months at Rs 104.70-Rs 104.80, while its gap with the open currency market has been shrinking with sliding demand throughout the country.
“We expect dollar to be stable in the interbank and open currency markets in future,” the analyst said. The dollar was being traded at around Rs 105.80 for buying and Rs 106.00 for selling on December 31, 2015.
“The demand of the greenback has decreased up to 70 per cent in last two months, while we have to surrender thousands of dollars to the banking system,” said Bostan. “The dollar may trade below Rs 105 if the situation in future remains the same as there is no demand of the US dollar except from Hajj or Umrah pilgrims,” he said.
People are still selling dollars in the Kerb market while the exchange companies are importing dollars from Dubai and other Middle Eastern countries to meet the local demand, the expert said. The import of dollar has to reduce if we are to maintain dollar on the same rate, he added.
One of the market experts said those who were sending dollar abroad illegally, are out of the market owing to the Panama Leaks scandal in which the names of almost 200 Pakistani politicians and businessmen have been disclosed. Since their names have been published, these people are quietly and looking at the situation, he added.
Another 400 names of Pakistani businessmen and bureaucrats may be released next month.
According to ECAP Secretary Zafar Paracha, the smuggling of dollar has almost ended and no case of the smuggling of the greenback has been reported in the last six months.
SBP Director Irfan Ali has informed the Senate that the transfer of money has been provided blanket cover in Economic Reforms Protection Act of 1992. The funds transfer via foreign currency accounts to and from Pakistan is a very easy task and money can even be transferred without the permission of the central bank.