Exchange companies remove ‘dollar cap’ to abolish grey market

KARACHI: The Exchange Companies Association of Pakistan (ECAP) has decided to remove the cap on the US dollar in a bid to end ‘artificial’ demand in the market, ARY News reported on Tuesday.

In a statement, ECAP secretary Zafar Paracha said that the association was withdrawing the cap on the US dollar in the “nation’s interest” as the limit was causing adverse effects.

The statement noted that there was artificial demand in the market as people would buy the dollar from us and sell it in the grey market.

“As a result, the business was shifting from official channels to the grey ones, hurting not only the reserves but also dealing losses to the exchange companies,” Zafar Paracha added.

He further said that once the dollar was allowed to trade at the market value, the customers would automatically shift from the grey market to the legitimate channels.

Meanwhile, Chairman Exchange Companies Association of Pakistan (ECAP) Malik Bostan said that the association has unanimously decided to remove the cap on the value of the dollar.

“By imposing the cap, the rate of the dollar increased instead of decreasing,” he said, adding that due to the unavailability of greenback in market, black market came into existence.

It is pertinent to mention here that the Pakistani rupee continued to depreciate against the US dollar in the interbank market.

According to the State Bank of Pakistan (SBP), the local currency on Tuesday depreciated by Rs0.25 against the greenback to close at Rs230.40.

The dollar is being sold between Rs238 to 242 in the open market, the forex dealers said. In the past five weeks, the rupee has dropped value consecutively every day.

Pakistan and the International Monetary Fund (IMF) have yet to finalise schedule for talks as the government’s request for lender’s mission remained unanswered.