Speculation and volatility of exchange rates: Action to be taken against erring banks, ECs: SBP chief

ISLAMABAD: The governor State Bank of Pakistan (SBP) has informed the National Assembly Standing Committee on Finance on Tuesday that action would be taken against banks and forex exchange companies (ECs) involved in volatility in the exchange rate upon finalisation of inquiry.

A meeting of the National Assembly Standing Committee on Finance presided over by Qaiser Ahmad Sheikh on Tuesday has taken up the agenda items of exchange rate and steep depreciation of the rupee against the dollar during the last one and a half month and wanted to know what was the reason of increase in rupee value after Finance Minister Ishaq Dar assumed the office.

Committee member Barjees Tahir said that he wanted to know from the Finance Ministry and the SBP that what has changed after the arrival of Ishaq Dar that led to increase in the value of the rupee against the dollar. He also wanted to know the names of the eight banks that were allegedly involved in speculation for making money and there was considerable difference in dollar rate in the interbank and exchange companies rate.

The Finance Committee directed the SBP to take appropriate action against all the banks and exchange companies those were involved in volatility in the exchange rate. The committee also asked the SBP to take exemplary action against banks and exchange companies involved in speculations to make profit so that no one could dare to play with the economy of the country in future.

Speculators won’t be allowed to play with PKR: Dar

The meeting was also of the view that during recent volatility in the exchange rate and the difference between the interbank rate and the rate offered by exchange companies, the banks earned exorbitant profits.

The committee was informed that few banks and forex companies were suspected of volatility in exchange rate and an investigation was in process. The regulator has initiated monitoring of the foreign exchange operations of banks and exchange companies and inquiry proceedings into the violations of the SBP regulations, the Governor SBP, Jameel Ahmad, informed the committee. Ahmed also held out assurance to the committee that violators would be penalised upon finalisation of the inquiry.

Dr Nafeesa Shah came down hard on the Finance Ministry and the SBP for not announcing any fiscal measures for flood affectees and stated that the situation was hopeless in her own district with water still standing on 87,000 acres of land. Additionally, she said that crops of cotton and dates have been destroyed and there is no hope for upcoming crops.

Shah said that there is a hopeless situation and the people are starving as well as running from pillar to post for tents as water is approaching and there is no word from the government about fiscal incentives for them. “We have been asking the world to be sympathetic to us and do climate justice but we are not doing climate justice to our own people”, she added.

She said that Rs25,000 being given under BISP does nothing. She said this is an important and emergency issue and must be discussed as water is standing even after three months in her constituency and district. Dr Shah wanted a response from the government’s economic team in this regard.

While discussing the issues of SBP’s restriction on import of fork-lifters, the Committee was of the view that the industry was suffering and the bank should look into this. The representatives of the Importers Association apprised that due to restriction imposed by the SBP, the commercial banks had stopped confirming letters of credit. The governor State Bank informed that there was no restriction on LCs opened before 5th July 2022. The meeting also asked the FBR to looking into the restriction of pasting invoices and packing lists in the containers of PVC resin.

Copyright Business Recorder, 2022