KARACHI: The Exchange Companies Association of Pakistan (ECAP) has announced removal of price cap on exchange rate aimed at ensuring availability of the greenback in the market.
It was decided in a meeting of the ECAP, chaired by ECAP President Malik Bostan and attended by Zafar Paracha, General Secretary, Haji Haroon, Haji Ramzan, Mureed Hussain and others.
The current situation of the open currency market was discussed in detail and it was unanimously decided to lift the cap on the dollar rate to ensure its availability in the market.
“We temporarily put a cap on the dollar rate in the interest of the country that the dollar rate will probably not increase, but it turned out to be very negative,” Malik Bostan said.
Instead of decreasing, the dollar rate is continuously increasing in the open currency market and even not available in the market. This led to the existence of a black market for people who needed dollars for travel, health and education purposes, he added.
He said that as a number of people needed dollars, the black market was growing rapidly and the State Bank and ECs’ reputation was being damaged. In addition, there have also been complaints from customers that some employees of ECs are not giving dollars intentionally.
“We have informed SBP officials that the situation has changed and the cap imposed in the interest of the country has proved negative for the market. Therefore, the ECAP has decided to lift this cap on exchange rate and from tomorrow, ECs will remove this cap,” Bostan said.
Before taking this decision, the ECAP has also decided to meet SBP officials and formally inform them about the black market and an ECAP delegation will meet Inayat Hussain, Deputy Governor of the SBP on Wednesday to discuss the entire situation and take them into confidence, he maintained.
Bostan hoped that after the removal of the cap, dollars will be available in the market and the black market will end and when the black market ends, the exchange rate will gradually come down.
Presently, ECs are not getting dollars from anywhere, due to which there is a shortage of dollar. Exchange companies received workers’ remittances amounting to 10 to 15 million dollars and the entire amount is being surrendered in the interbank, he said.
Previously, ECs were allowed to hold 80 percent inflows of home remittances for the public and 20 percent was being surrendered into the interbank market, he added.
He said with the recent announcement made by the SBP, that importers can clear their imported consignments arriving at the port by arranging foreign exchange of their own resources, has further created panic and high demand of dollar in the market. This move also increased the rate of Hundi/Hawala and the rate has increased by some Rs 5 against the dollar in the black market in last 2 days, he added.
“We have to fight against the black market and the only solution is we should sell the dollar at the market rate as soon as people start getting dollars,” the chairman ECAP said.
Workers’ remittances are also decreasing for the last 3 months and monthly inflows have reduced from $3 billion to $2 billion because of the difference of 20 to 30 rupees in official and unofficial rate. If the market rate becomes equal, remittance will also increase. Bostan said ECs with the support of the SBP will play their role in improving the situation and request the public to cooperate as Pakistan is facing a big crisis.
“If the people do not cooperate with us, we will tell the government that we are ready to close our business for the sake of the country,” he added. He appealed to the people to sell dollars at the current rate and see that if the supply of dollar increases, its rate will fall in coming days.
Copyright Business Recorder, 2023