KARACHI: The ongoing crackdown against illegal forex trading and smuggling has so far yielded up to $900 million surplus in the open market which was deposited in banks, said currency dealers.

Currency dealers said the much-needed administrative measures produced extremely valuable results for the economy but the policy reforms for Afghan transit and smuggling of Iranian oil also supported saving the hard-earned dollars.

“We have deposited an estimated $800 to $900 million in the banks since the crackdown started in September showing highly appreciable results,” said Zafar Paracha, General Secretary of the Exchange Companies Association of Pakistan (ECAP).

As a direct outcome of the crackdown, the daily average trading volume of exchange companies has expanded to $50 million from $5-$7m earlier.

“We are selling up to $40m per day to the banks while inflows from overseas Pakistanis are also unprecedented,” said Mr Paracha.

“The remittances being channelled through the exchange companies have increased by 10 to 15 per cent and surely inflows through banks would also rise,” he said.

Dealers in the banking market said the remittances are expected to rise by 25pc to $2.5bn in September over August.

Bankers said the State Bank of Pakistan (SBP) was also buying dollars from the interbank market for debt servicing but no official figure was available.

The SBP held $7.6bn in reserves till Sept 28.

Bankers said the interbank market was witnessing higher inflows as the day-to-day depreciation of the dollar has compelled the exporters to sell out their entire holdings.

Rupee shines

The central bank on Monday reported that the dollar remained under pressure and lost another Rs1.04 to close at Rs281.65 from Rs282.69 the day.

Bankers said the SBP was not interfering in the exchange rate but the import curbs restricted dollar outflows.

In FY23, the government slashed imports and succeeded in bringing down the current account deficit to $2.4bn from $17.5bn a year ago.

The dollar in the open market depreciated by Re1 to Rs280.50. Dealers said most of the time the market received sellers while buyers were few reflecting a falling demand for dollars.

They said the reforms in the Afghan Transit Agreement would produce long-term effects for Pakistan since the arrangement was misused by the smugglers from both sides of the borders.

Published in Dawn, October 10th, 2023