The dollar rate cap will be lifted starting on January 25 according to a statement made on Tuesday by the Exchange Companies Association of Pakistan (ECAP) (tomorrow).
The sharp decline in the central bank’s foreign exchange reserves, which have dropped to $4.6 billion, has had a significant negative impact on the exchange rate. The rupee has been declining “despite being managed,” according to currency experts, by the State Bank of Pakistan (SBP).
Due to a lack of dollars, the difference in rates between the interbank and open markets has grown significantly, severely harming the economy and diverting remittances away from the official banking system and toward the black market.
The trade and industry, as well as the agricultural sector, which depends on diesel during the harvesting season, may be negatively impacted by the rationing of gasoline and diesel in the coming two to three months due to the lack of dollars.
Tuesday saw an association meeting that was presided over by ECAP Chairman Malik Bostan and General Secretary Zafar Paracha.
Bostan claimed that the decision to cap the dollar rate had turned out to be “negative” in a thorough statement released after the meeting.
“Instead of declining, the dollar rate increased, leading to a shortage of dollars on the market and the emergence of the black market.”
He also bemoaned the fact that people had to turn to the black market in order to purchase dollars for travel, paying for their education, or paying for medical expenses.
The government, he claimed, believed exchange companies were “deliberately blackmailing” them as a result of the situation’s “panic in the market,” which had caused the situation.
“We made a decision with these things in mind.” He added that the association would be meeting with the central bank at 9 a.m. tomorrow.
As the governor is in Islamabad, we have a meeting with the SBP deputy governor tomorrow morning, Bostan said. We’ll trust them with the decision because “the cap imposed in the national interest has proven to be negative.”
He continued, “Once the black market shuts down, the dollar rate will start to fall. I want to inform everyone in the country that there is a shortage of dollars because exchange companies can’t find any sources for them.
He claimed that it was necessary to suppress the black market. He claimed that lifting the dollar rate cap is the only way to achieve this.
The ECAP chairman asserted that “when people can buy dollars easily, the rate of the greenback will automatically start to come down.” When the intermarket and pre-market rates are equal, remittances will also rise.