Baqar HussainPakistanis are conducting around 5,000-7,000 illegal international transactions in dollar-denominations every day via Dubai, as tightening of regulations in property and money markets has boosted business at the parallel currency avenues.
“The situation has created shortage of dollars in the open market and shot the greenback value for the time being,” said Malik Bostan, a currency dealer.
He said that the Hawala/Hundi business {money transition through informal channels} is prohibited in Pakistan. However, Dubai has legalised this through issuance of licences to currency dealers so that they can settle their international payments.
He said that the government’s recently-introduced change in property valuations has diverted money from real estate and towards Dubai, dollars, gold and bonds.
On Thursday, the US dollar traded at Rs108 in the open market, up from Rs105-106 in January 2016.
“The price of a dollar has shot to Rs110 in hawala/hundi {in Pakistan},” said Zafar Paracha, General Secretary, Exchange Companies Association of Pakistan.
Also, the money crisis in India, rumours of cancellation of the Rs5,000 currency-notes and bonds worth Rs40,000/each in Pakistan and additional demand for gold have mounted pressure on Rupee-Dollar parity, other dealers added.
Dealers said the end of the money crisis in India would help Pakistani rupee recover by Rs1-2 a dollar.
“The expected increase in inflow of dollars in face of remittances in December should also help rupee appreciate against the dollar,” Paracha said.
He added a number of Pakistanis working abroad are expected to remit a higher amount in December before they come Pakistan on annual leave.
Bostan added that this time last year the price of dollar had also shot to Rs108. Later on, its price had returned to Rs106 in January 2016. “This history is expected to repeat…we may see Rupee recovering its value in January,” he said.
Black money conversion
He said that the black money is also being converted into smuggled gold in the country. Gold dealers in the parallel markets here are also smuggling the yellow metal to India and Dubai.
Dealers added that price of bullion in India is Rs4,000-5,000 per tola (11.66 gram) higher than Pakistan. It is Rs2, 000 per tola expensive in Dubai.
Afghanistan is another big market, which attracts a significant amount of dollars from Pakistan.
“Increase in demand for gold has given additional demand for dollars. This, along with rising demand for greenback from other origins, has created a deficit of $4 million a day at open currency markets in Pakistan,” Bostan said.
The demand for dollars as open markets has surged to around $10 million a day from around $6 million in the recent past.
If the deficit prolongs, currency dealers have an option to borrow dollars from the State Bank of Pakistan for one-month.
He said they have informed the Customs Department about smuggling of dollars and gold via green-channels at Pakistan airports. “Zahid Khoker, Chief Collector, Customs has assured us to overcome misuse of green-channels. The Customs would soon start scanning luggage at the green-channels as well,” he said.
The currency dealers have also informed Finance Minister Ishaq Dar and also held at least two meeting with high-officials of the central bank.
Syed Zaki Hussain
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