KARACHI: Exchange companies (ECs) have been allowed to trade 20 percent of remittances in the open market to reduce pressure on the rupee, the State Bank of Pakistan said on Thursday.
Exchange firms last week requested Finance Minister Ishaq Dar to allow at least half of the remittances to be used in the open market, with the expectation that the move would reduce demand for the dollar, JEE News reported. will come and its rate will decrease in the currency market.
Exchange Companies Association of Pakistan (ECAP) chairman Malik Bustan said in a statement, “On our request, Governor State Bank of Pakistan has enabled exchange companies to sell 20 percent of workers’ remittances to the general public. “
Earlier, these firms were depositing 100% of workers’ remittances in the interbank market. Exchange firms bring home remittances with the help of money transfer operators to their bank accounts in the country.
Due to the strong demand for dollar in the market, the rupee is under pressure. The rupee was trading at 227.75 against the dollar in the open market on Thursday.
Bustan along with other ECAP members held a meeting with State Bank Governor Jameel Ahmed and thanked him for helping the exchange companies whenever they face any problem.
The chairman said that exchange firms are buying and selling dollars as per the rate set by ECAP.
He said that due to the low rates of exchange companies, consumers are selling in the black market instead of selling to exchange companies because their rates are 10 to 15 rupees per dollar higher than exchange companies.
Due to this illegal buying and selling, the foreign currency trading business of exchange companies has decreased by almost 80% after September 2022. Currently, 1% of users are selling dollars over the counter of exchange companies, while buyers are 200% more than before.”
Exchange companies are facing a shortage of greenbacks. Now we are only selling dollars to customers who want to travel to the US or send health and education fees. Dollars are not currently being sold to customers holding US currency.
Exchange firms advised the government to reduce credit card limits and travel quotas from $10,000 to $5,000 to curb the dollar.
Credit cards were issued rapidly this year, putting the rupee under pressure. A credit card holder can use it for international transactions, which is equivalent to transferring dollars abroad from Pakistan.
Exchange firms requested Finance Minister Dar to reassess the trade policy with Afghanistan.
Bostan said that about $2 billion goes to Afghanistan every month from Pakistan through official and unofficial trade, misuse of Afghan transit trade, smuggling and border crossings, all of which are burdening Pakistan’s foreign exchange reserves.
“Government should immediately open barter trade local currency letters of credit and trade through banking channel. Cash dollar trade should be banned.
Another major reason is that the government has signed a $2 billion coal deal with the Afghan government, worth $6 million for 22,000 tons per day.
Pakistan has been importing coal from Afghanistan for a long time. It was decided to make payments against imports to Afghan traders in Rs.
