KARACHI : Jan 24, 2023: The forex exchange companies on Tuesday decided to remove cap on US dollar rate to counter a black market mechanism and enroute US currency trade to the banking channel.
The forex exchange companies took a decision to this effect at a meeting of Exchange Companies Association of Pakistan (ECAP) chaired by chairman , Malik Bostan Khan.
Other ECAP office bearers who attended Tuesday’s meeting included secretary , Zafar Paracha , Haji Ramzan, Haji Haroon , Haji Mureed Hussain and others.
The meeting unanimous decided to remove cap on dollar rate meant to artificially manage the US currency rate has proved counter productive . It noted that the caping of US dollar rate has given birth to a black market mechanism for dollar trade which was not only hurting to the national economy , but also damaging the legal banking system as the people preferred black market system over legal banking system for more benefit on their funds’ transactions . The ECAP office bearers strongly argued that due to emergence of black market system , US dollar was not available for those who were in need of green back currency for education of their kids or for any kind of treatment abroad.
Addressing the ECAP meeting, Malik Bostan Khan said forex companies and State Bank of Pakistan (SBP) was gaining bad name for non availability of US dollar in the market and it was extremely important to uncap US dollar and have a fair market mechanism for trade of US currency.
Mr Bostan noted that ECAP representatives are scheduled to call on SBP Deputy Governor in the morning on Wednesday to inform him on the factors that played a negative role in currency market sentiments during US currency capping mechanism . He said the SBP Governor who is currently in Islamabad has also been informed about ECAP decision of uncapping US currency rate.
Mr Khan claimed that uncapping of US dollar rate will improve its.availability in currency market and subsequently led to ending up of black market mechanism. He hoped that free market mechanism may result in increase in inflow of US dollar in currency market and it will subsequently bring dollar rate down in Pakistan.
Mr Bostan added that big difference in open , interbank rate as compare to black market has resulted in decrease in remittances from $ 3 billion to $ 2 billion a month . It shows that a major portion of workers remittances was going into black market mechanism. He claimed that exporters were not bringing their exports proceeds to Pakistan due to widening gap of US dollar rate in legal and illegal trade .
He hoped that decapping of US dollar will enhance inflow of US currency in domestic currency and subsequently help the government build up its forex reserves. He hoped that Pakistani people will stand with them and resist unnecessary buying of US currency to steer Pakistan out of current financial crisis.
Mr Bostan said importers need US dollar for their imports, but it is not a need of a common man . He urged upon the people not to buy US dollar for investment as its adding to the economic woes of Pakistan. He appealed to the people to understand that Pakistan was passing through a difficult phase and it was their duty to stay away from the acts like buying US dollars just to make money . He also warned that forex dealers will shut their currency business if the common Pakistanis keep buying US currency just for money-making.