KARACHI: While the Federal Investigation Agency (FIA) is taking all-out measures against illegal currency business, pressure on the exchange rate has refused to ease out as dollar reached a record high of Rs181.3 in the open market on Friday.

FIA Director General Sanaullah Abbasi told Dawn that during December alone the agency had arrested 158 people and seized local and foreign currencies worth Rs300 million across the country in an effort to stabilise the rupee against the greenback.

He said the crackdown on those involved in illegal currency business was launched against the backdrop of the fear that dollar was being hoarded and smuggled out of the country.

DG says foreign currencies worth Rs300m seized this month

He said the FIA acted upon information shared by intelligence agencies, the State Bank of Pakistan and its own field formations. Asked as to why the dollar was rising against the rupee both in interbank and open markets, he said the agency only dealt with the black market.

“There are other national and international variables and macro and micro economics which deal with appreciation and depreciation of any currency [and these] are being taken care of by the government, particularly the SBP and the finance ministry,” he replied cautiously.

Dr Abbasi divides the FIA’s campaign into two phases. According to him, the first phase, from Aug 25 to Nov 30, began soon after the change of regime in Afghanistan. “FIA registered 92 FIRs, conducted 40 inquiries, arrested 107 persons, sealed 21 shops and recovered Rs365m, including foreign currency worth Rs156m.”

In the second phase, from Dec 1 till date, the FIA registered 117 FIRs, conducted 32 inquiries, arrested 158 persons, sealed nine shops and seized Rs300m, including foreign currency worth Rs88m.

The FIA chief said the total amount of money seized during this year stood at Rs1.3 billion.

Over 10,000 transactions scrutinised Dr Abbasi said the federal government had asked the FIA to look into operations of foreign exchange companies.

“FIA conducted inspection of their sale-purchase record and examined five A category and 29 B category forex companies. More than 10,000 transactions of sale and purchase by these companies were scrutinised. After detecting some irregularities, seven FIRs were registered and 11 inquiries conducted against B category forex firms,” he said.

During the current year, the FIA scrutinised suspicious transactions in bulk after receiving information about them through the Suspicious Transaction Reports (STRs).

After conducting inquiries in these multilayered complex financial transactions, 156 FIRs were registered since

Jan 1 to date, he said, adding that 29 STRs were referred to the Federal Board of Revenue, National Accountability Bureau and Anti-Narcotics Force for further proceeding.

He said the FIA’s action was still going on as contributing to rupee stabilisation was the agency’s top priority.

‘Govt seems unconcerned’

Zafar Paracha, chairman of the Exchange Companies Association of Pakistan, linked seriousness on part of the government with stabilisation of rupee.

He told Dawn that all indicators of the economy suggested that dollar was overvalued as its exchange rate should be between Rs160-165.

“Overall, the SBP has taken good measures but their effectiveness has not reflected in the [dollar] rate. We have not seen similar seriousness from the government and it seems as if the government and the SBP are not on the same page,” Mr Paracha said.

He said the market believed that the government was not taking any interest in controlling the rupee fall because devaluation might be one of the conditions of the International Monetary Fund. “Of course [Adviser to the Prime Minister on Finance] Shaukat Tarin has said dollar is overvalued but we haven’t seen a similar statement from any other side.”

About the FIA’s action, he said: “Exchange companies do not determine the interbank rate. Rate in open market appreciates because of a rise in interbank rate. We are licensed entities doing business in strict compliance with the conditions set by the central bank and it is unfortunate that our members and clients are being called by the FIA.”

Published in Dawn, December 27th, 2021

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