Crackdown and Restrictions bear fruit as $1 billion deposited in Pakistani Banks
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The ongoing crackdown against illegal forex trading and smuggling has had a significant impact on the open market, resulting in a surplus of up to $900 million, which has been deposited in banks, according to currency dealers.
These currency dealers have emphasized the importance of administrative measures that have yielded valuable results for the economy. Additionally, policy reforms related to Afghan transit and the smuggling of Iranian oil have also contributed to the accumulation of hard-earned dollars.
Zafar Paracha, the General Secretary of the Exchange Companies Association of Pakistan (ECAP), stated that an estimated $800 to $900 million has been deposited in banks since the crackdown began in September. This achievement is seen as highly commendable. Furthermore, as a direct consequence of the crackdown, the daily average trading volume of exchange companies has increased significantly, reaching $50 million compared to the earlier range of $5 to $7 million.
Mr. Paracha also highlighted that exchange companies are now selling up to $40 million per day to the banks, and there has been an unprecedented increase in inflows from overseas Pakistanis. Remittances channeled through exchange companies have seen a 10 to 15 percent rise, with expectations of a similar increase in inflows through banks.
In the banking market, experts predict that remittances are anticipated to rise by 25 percent to reach $2.5 billion in September compared to August. The State Bank of Pakistan (SBP) has been buying dollars from the interbank market for debt servicing, although official figures are not readily available. As of September 28, the SBP held reserves totaling $7.6 billion.
Bankers have noted that the interbank market is experiencing higher inflows due to the daily depreciation of the dollar, prompting exporters to sell their holdings. This situation has further contributed to the changing dynamics of the forex market.
