ISLAMABAD: The foreign exchange dealers on Tuesday suggested to the government that it should expand the size of currency swap agreement with China and enter into similar pacts with Middle Eastern countries in order to reduce pressure on the rupee.

According to the dealers, Pakistan’s over $30 billion trade with China and the Gulf states be conducted in bilateral currencies.

The proposal was floated by a delegation of foreign exchange dealers, led by the Forex Association of Pakistan President Malik Bostan, that called on Finance Adviser Dr Abdul Hafeez Shaikh on Tuesday.

The delegation recommended that Pakistan should expand the size of currency swap agreements with China and introduce them for Gulf countries as it would reduce the demand for greenback and thus bring down the respective exchange rate.

Dealers also claimed that about $10-11bn dollars are estimated to be parked in private and the government should consider innovative means to bring those dollars into the banking channels or currency market to support reserves and strengthen the rupee.

The representatives of the association said the smuggling of dollar to Afghanistan and Iran was a serious issue which must be strictly dealt with.

The delegation informed that people travelling abroad carry about six million dollars per day.

In order to reduce the outflow of dollar, the delegation proposed that the currency limit for people travelling abroad be revised from current $10,000 to $5,000 or $3,000 per person. This should offset the pressure on rupee-dollar exchange rate, they said.

Dealers further expressed concern over under-invoicing by some importers and suggested that custom authorities should take over the goods and auction them and act against such importers.

It was explained that the Customs Act already had a provision under which authorities could take over the goods suspected to be under-invoiced by offering a value higher than the declared amount.

Shaikh assured the delegation that their proposals would be considered. The meeting was also attended by Secretary Finance Naveed Kamran Baloch, State Bank Governor Dr Reza Baqir, senior officials of the Ministry of Finance.

Published in Dawn, May 29th, 2019