AVN 67.05 Increased By ▲ 1.85 (2.84%)
BAFL 31.05 Increased By ▲ 0.31 (1.01%)
BOP 4.88 Increased By ▲ 0.08 (1.67%)
CNERGY 3.78 Increased By ▲ 0.07 (1.89%)
DFML 14.49 Increased By ▲ 0.28 (1.97%)
DGKC 41.61 Increased By ▲ 0.56 (1.36%)
EPCL 46.22 Decreased By ▼ -0.23 (-0.5%)
FCCL 11.63 Increased By ▲ 0.23 (2.02%)
FFL 5.11 Increased By ▲ 0.06 (1.19%)
FLYNG 5.80 No Change ▼ 0.00 (0%)
GGL 10.40 Increased By ▲ 0.07 (0.68%)
HUBC 67.54 Increased By ▲ 0.67 (1%)
HUMNL 5.77 Increased By ▲ 0.06 (1.05%)
KAPCO 28.00 Increased By ▲ 0.24 (0.86%)
KEL 2.29 Increased By ▲ 0.09 (4.09%)
LOTCHEM 25.06 Increased By ▲ 0.16 (0.64%)
MLCF 21.67 Increased By ▲ 0.23 (1.07%)
NETSOL 86.06 Increased By ▲ 2.46 (2.94%)
OGDC 92.38 Increased By ▲ 6.48 (7.54%)
PAEL 11.06 Increased By ▲ 0.05 (0.45%)
PIBTL 4.23 Increased By ▲ 0.01 (0.24%)
PPL 80.15 Increased By ▲ 5.67 (7.61%)
PRL 13.64 Increased By ▲ 0.21 (1.56%)
SILK 0.89 Decreased By ▼ -0.03 (-3.26%)
SNGP 43.47 Increased By ▲ 3.07 (7.6%)
TELE 5.93 Increased By ▲ 0.07 (1.19%)
TPLP 15.82 Increased By ▲ 0.42 (2.73%)
TRG 114.88 Increased By ▲ 3.47 (3.11%)
UNITY 13.76 Increased By ▲ 0.01 (0.07%)
WTL 1.16 Increased By ▲ 0.02 (1.75%)
BR100 4,124 Increased By 87 (2.16%)
BR30 14,930 Increased By 518.1 (3.59%)
KSE100 41,191 Increased By 719.6 (1.78%)
KSE30 15,494 Increased By 331.4 (2.19%)
Business & Finance

Dollar manipulation: SBP says probe complete, decision to be made on fiscal or regulatory action

  • Action would be taken by either the SBP or government, but dual action cannot be taken, says central bank governor Jameel Ahmad
Published January 23, 2023
Follow us

KARACHI: The State Bank of Pakistan (SBP) has completed its investigation over alleged exchange-rate manipulation by commercial banks in the country, and will put forth the decision in a matter of “days” after consultations on whether the apparent penalty is to be pursued from a regulatory or fiscal standpoint.

“The SBP has inspected 13 banks, and identified the issues,” said SBP Governor Jameel Ahmad during the question-and-answer session held on Monday after the Monetary Policy Committee (MPC) meeting of the SBP. Ahmad had earlier announced that the MPC had decided to increase the key interest rate by 100 basis points, taking the level to 17%.

“The only issue (left) is what (type of) action would be taken against this (foreign exchange) income earned by banks,” said Ahmad, implying that the SBP had indeed found the banks guilty of exchange-rate manipulation.

“One is the regulatory side action — the other is fiscal action, which includes taxation-related measures.

“This is the issue, which has led to the delay. However, action would be taken either by the SBP or the government. However, both actions cannot be taken at the same time. This leads to legal complications

“We just do not want to pursue the route of double action,” he said.

The SBP chief added that the period the central bank focused on for the investigation was between January to September 2022, “especially June and July”.

“The issue of currency volatility was resolved in the fourth quarter,” he said.

Ahmad said gross income to the tune of Rs100 billion was generated by banks in the first three quarters of 2022.

The SBP’s investigation comes after Pakistan’s rupee fluctuated wildly in 2022, hitting record lows against the US dollar in September before suddenly rising towards the end of that month, leading authorities to suspect manipulation by banks and exchange companies.

In October, SBP chief spokesperson Abid Qamar had said results might come soon, but refrained from giving an exact date for the completion. However, he said that the probe had started some time back during the tenure of the previous finance minister, Dr Miftah Ismail.

In November, Ahmad had said the central bank expanded its scope of investigation beyond eight banks with the inspection team working towards the end of the month as its deadline. Ahmad refrained from taking names of the banks, but clarified the scope of the investigation had expanded after initial scrutiny.

MPC’s decision

On the hike in interest rate on Monday, Ahmad said the MPC found that the increase was inevitable.

“The rationale behind the rate hike is that inflationary pressure persists.

“Secondly, challenges pertaining to the current account deficit remain as there is a delay over expected inflows. This has added pressure on our foreign exchange reserves,” he said.

The central bank chief shared that he expects a current account deficit (CAD) to the tune of $9 billion for FY23.

Ahmad also expressed optimism over Pakistan’s upcoming payment obligations, saying that inflows are lined up.

“There are difficulties but we have arrangements. Repayments, after rollovers, will not be more than $3 billion by the end of FY23.

“Amount of $15 billion has already been settled through repayments ($9 billion) and rollovers ($6 billion).”

Comments

Comments are closed.

Kashif ALI Jan 23, 2023 07:05pm
Miftah will be missed as a prudent, go-getter Finance minister of Pakistan. An able economist from Wharton Business School.
thumb_up Recommended (0)
Boncr Jan 24, 2023 06:05am
I wish our country became default soon. When army and politicians are not royal for the country. Since1947 we are beggers and depend on charity and zakat.
thumb_up Recommended (0)
Truthisbitter813 Jan 24, 2023 09:19am
@Boncr, Well at least you seem to be earning your cheddar.
thumb_up Recommended (0)

Dollar manipulation: SBP says probe complete, decision to be made on fiscal or regulatory action

Pakistan, IMF grapple for consensus to unlock critical funding

PM Shehbaz orders immediate restoration of Wikipedia

Daraz Group lays off 11% global workforce to prepare for ‘current market reality’

Rupee up 0.46%, ends day at 275.30 against US dollar

KSE-100 jumps over 700 points amid return of positive sentiment

Pharmaceutical companies seek ‘inflationary adjustments’ in medicine prices

Second hike in two weeks: Honda Atlas jacks up car prices by up to Rs550,000

PM Shehbaz announces aid for quake-hit Turkiye

India opens its largest helicopter factory in new defence push

Govt projection of achieving $3bn current account surplus in FY23 ‘unrealistic’: PBC