Ishaq Dar, the finance minister, emphasized that the fair value of the rupee “is 180-200 to a dollar” and threatened to take strong action against anyone who hoards, smuggles, and manipulates US dollars in order to maintain the devalued rupee. On Saturday at the State Bank of Pakistan (SBP), he elucidated on the government’s action plan while presiding over meetings with the presidents and chief executive officers of commercial banks and representatives of exchange businesses.
The sessions were co-chaired by Governor of the Central Bank Jameel Ahmed. Participants in the meeting confirmed to, the special adviser to the prime minister on finance, was also there. The goal was to support the strengthening rupee while addressing the dollar shortfall in marketplaces, particularly in the open market where small merchants arrange import payments.
According to Malik Bostan, President of the Forex Association of Pakistan (FAP), since the US terminated its two-decade-long war in August 2021, Afghanistan has become a significant financial burden for Pakistan.
According to him, Afghanistan drains $2 billion a month from Pakistan’s foreign exchange reserves, which results in a shortage of foreign currency on the home market. In contrast to Friday’s interbank market price of Rs222.47 in Pakistan, a dollar was being offered for Rs235-237 on Saturday in Afghanistan.
The smuggling of foreign cash into Afghanistan is being encouraged by this, he said. A meeting attendee paraphrased Dar as stating that the Pakistani government will start a crackdown on the illicit Hawala and Hundi operators and restore the rupee to its fair value of 180-200 “in a matter of weeks and days.” Despite receiving a $1.5 billion loan from the Asian Development Bank (ADB) earlier in the week, the local currency dropped 1.25 percent (or Rs2.47) in the previous three straight working days and concluded trading at Rs222.47 versus the US dollar on Friday in the interbank market. The Real Effective Exchange Rate (REER), which measures the value of Pakistan’s rupee against a basket of other currencies, increased to “108 yesterday,” according to Tresmark, a treasury consultancy business (Friday). The rupee is clearly overpriced as a result of this.
