The Federal Investigation Agency (FIA) on Sunday seized currency worth Rs40 million and arrested three people in Lahore, the interior ministry said, as a government crackdown against the hoarding of US dollars and speculative currency trade gained momentum.

The action was taken on the directives of FIA's Punjab Zone-I Lahore director, Mohammad Waqar Abbasi, who instructed authorities to take strict action against those involved in dollar hoarding, money laundering, hundi/hawala (illegal money transfer) and "illegal speculation" regarding the de-valuing of Pakistani rupee, the interior ministry said in a press release.

According to government directives cited by the ministry, the "dollars were hoarded to make rupee weaker in [the] market. This action caused [an] artificial demand of dollar and its rate increased artificially."

Six teams were thus constituted by the FIA, which carried out raids simultaneously at all money exchanges in Lahore and inspected their records.

During the action, currency "worth crores of rupees" was taken into possession from DD Exchange Company Lahore, the press release said. A second interior ministry statement stated the currency seized amounted to Rs40 million.

Three persons were also taken into custody and first information reports (FIRs) were registered against them.

"Investigation is in progress and startling revelations are expected from them especially against hoarders of dollars," the ministry said.

Information Minister Fawad Chaudhry had announced on Twitter that “a full-fledged operation against dollar hoarding and speculative currency trade” would be launched by the FIA, as signs of panic started appearing in foreign currency markets after the dollar touched Rs148 in open trading on Friday.

A State Bank spokesperson had then told Dawn that there was no law to arrest any person for buying dollars or keeping foreign exchange as investment, but if any institution was found involved in currency hoarding to manipulate the exchange rate, it could be investigated.

“We have a mechanism with FIA to probe a case if there is any violation of banking laws and the State Bank can ask FIA to investigate such violations,” he had added.

Finance Minister Asad Umar has ruled out a further devaluation of the rupee, which has lost about 25 per cent of its value over the past year, urging people to invest in the stock market and not waste money buying dollars.