On Tuesday, the Exchange Companies Association of Pakistan (ECAP) made the announcement that the cap on the US dollar would be lifted as of today, January 25.
The central bank’s sharp reduction in its foreign exchange reserves, which now total $4.6 billion, has been the primary factor that has had a significant impact on the exchange rate. The rupee has been falling, according to currency experts, “despite being managed” by the State Bank of Pakistan (SBP).
The gap between its rates in the open and interbank markets has widened significantly in the face of a shortage of dollars. This has had a significant negative impact on the economy and has shifted remittances away from the legal banking channel and into the grey market.
Some experts have suggested that the lack of dollars could result in the rationing of gasoline and diesel within the next two to three months. This would ultimately affect the commercial and industrial sectors as well as the agricultural sector, which requires diesel during the harvest season.
A meeting of the association that was held on Tuesday was presided over by ECAP Chairman Malik Bostan, and General Secretary Zafar Paracha was also present.
Bostan stated in a comprehensive post-meeting statement that the decision to cap the dollar rate had been “negative.”
“Instead of falling, the dollar rate increased, rendering the greenback unavailable on the market and spawning the black market.”
He also railed against the inability of citizens to purchase dollars for travel, education, and health care costs, and forced to use the black market.
According to him, the situation had caused a “panic in the market,” leading the government to believe that exchange firms were “deliberately blackmailing” them.
“We made a decision taking these things into consideration.” He added that the association and the central bank would meet tomorrow at 9 a.m.
Bostan stated, “We have a meeting with the SBP deputy governor tomorrow morning because the governor is in Islamabad.” We will trust them with the decision—the national interest-imposed cap has proven to be detrimental.
In addition, he stated, “Once the black market ceases to operate, the dollar rate will begin to decrease.” I would like to inform the nation that exchange companies cannot acquire dollars from any source, resulting in the shortage.
Bostan added that importers were receiving the dollars from worker remittances in accordance with the central bank’s orders. He added that despite the central bank’s belief that citizens would sell their dollars to exchange companies, citizens were actually coming to purchase the greenback instead.
The ECAP chairman said that the SBP’s directive to banks to “provide one-time facilitation” to importers to ease the ongoing crisis had also caused “panic” in the market and raised the rate in the black market.
He stated that the illegal market must be curtailed. He stated that removing the dollar rate cap was the only option.
The ECAP chairman stated, “The rate of the greenback will automatically start to decrease when people are able to purchase dollars easily.” When the intermarket and pre-market rates are the same, remittances will also rise.
Bostan also urged the nation to “boycott the dollar” at the same time.
Pakistan is experiencing a crisis and requires every single dollar. Except for those who use the greenback to pay for essential travel, education, or health care, they should avoid the dollar.
