- In Bloomberg interview, Zafar Paracha said 'currency is being smuggled without any doubt. This has become quite a lucrative business'
Traders and smugglers were transferring as much as $5 million across the Pakistani border and into Afghanistan everyday, Exchange Companies Association of Pakistan (ECAP) General Secretary Zafar Paracha told Bloomberg.
“Currency is being smuggled without any doubt. This has become quite a lucrative business,” he said, adding that this is due to Pakistan’s “flawed” immigration and trade policies and border controls.
The report said the smuggling of dollars provides “some support for the squeezed economy after the US and Europe denied the Taliban regime access to billions in foreign reserves.”
“The illicit flows show how the Taliban are evading sanctions after their 2021 takeover of the country”.
However, it noted that “for Islamabad, the outflows are exacerbating a rapidly developing economic crisis.”
The rupee closed near an all-time low at Rs276.28 per dollar on Tuesday. In addition, the foreign exchange reserves held by the SBP plunged $592 million to stand at a critical level of $3.09 billion as of January 27.
Meanwhile, the afghani has gained about 5.6% against the greenback over the past year through Monday, one of the strongest performances of any currency in the world.
Bloomberg quoted Alpha Beta Core CEO Khurram Schehzad as saying that Afghanistan needed about $10 to $15 million daily and half of this amount comes from Pakistan.
Meanwhile, Haseeb Noori, spokesman of Taliban-run Da Afghanistan Bank, stated that the neighbouring nation had enough dollars in reserve to support the economy, some of it coming from the UN, which has been providing about $40 million in humanitarian aid each week since last year.
“The smuggling really took off in the middle of last year after Afghanistan increased coal exports to energy-hungry Pakistan,” Bloomberg quoted officials at Afghanistan’s finance ministry as saying.
Smuggling has also been boosted by the Taliban’s ban on the use of Pakistan’s rupee as legal tender in Afghanistan, which forces exporters to trade in dollars and bring the US currency back to the country, the officials said, asking not to be identified because they aren’t authorised to speak to media.
Meanwhile, SBP governor Jameel Ahmad said that “Pakistani market is bound to get affected when they purchase dollars from the local market.”