THE Pakistan Ulema Council issued a religious decree (fatwa) against hoarding of dollars. They say that it is a grave sin. But what about the institutions which have been allowing and facilitating the commission of this grave sin?

The State Bank of Pakistan has allowed the establishment of a separate financial sector comprising money exchange companies and claims to regulate it. The sale and purchase of dollars is being done through these exchange companies.

But what is the need of the buying and selling of dollars for anyone in the country?

Legally, foreign currency cannot be used to settle any transaction (sale, purchase, provision of services) in Pakistan. Then why do we allow anyone in the country to buy dollars?

The facility of buying and selling dollars should only be available to travellers going out of or coming into the country. So the sale and purchase of dollars needs to be limited to the international departure and arrival lounges of airports.

Dollars may be purchased from an individual only if he/she has arrived in Pakistan from abroad. The arriving passenger must declare and encash all dollars. This may also be marked on the passport and put in database. The person upon leaving Pakistan may convert back the Pakistan rupees to dollars to the extent of dollars declared on arrival.

There should be no other need for anyone to convert dollars to Pakistan rupees and vice versa.

For the existing stock of dollars with the public, the government should announce a suitable time period to convert these into Pakistan rupees at a fixed exchange rate. After this time period, dollars may not be accepted for conversion or may be converted with a substantial penalty. The rate of penalty may be increased with the passage of time.

It applies to all foreign currencies. These steps will bring in all the foreign currency into the market and bring down the exchange rate.

The exchange companies may continue to perform other functions entrusted to them.

S.M.Nadim
Karachi

Published in Dawn, June 27th, 2019