Perturbed by the inexplicable upturn in the value of the greenback in the open market, the authorities have initiated a probe into illegal smuggling of dollars from Pakistan to Afghanistan.
By Muhamad Ali
ISLAMABAD: The authorities have ordered a probe into the alleged large-scale smuggling of United States dollars from Pakistan to Afghanistan, Independent Pakistan has reliably learnt.
After the arrival of Ishaq Dar to helm the Ministry of Finance, the rupee’s exchange rate improved initially and came down from PKR 240 to PKR 215 against the US dollar. However, the trend has started to reverse with the rupee depreciating against the dollar in the last few weeks.
Market sources have long maintained that the flight of the greenback from Pakistan to Afghanistan to the tune of millions of dollars a month is one of the key drives of the slide of the rupee. The trend picked up in the wake of the withdrawal of the US and international forces from the neighbouring country last August, followed by the ascent of the Taliban to the throne of Kabul.
Others say the strength of the dollar in the local currency market is rooted in a liquidity crunch Pakistan is facing because of dwindling foreign exchange reserves. The Federal Board of Revenue (FBR) in particular considers that the reports of dollars being smuggled out of Pakistan to Afghanistan are exaggerated.
The official forex reserves held by the State Bank of Pakistan (SBP) stood at USD 10.8 billion this April when the Pakistan Democratic Movement (PDM) took power after ousting Imran Khan through a no-confidence motion. Even since, they have consistently remained below that level.
The country’s official forex reserves stood at USD 8.9 billion as of October 21, 2022 despite the revival of the IMF program and the release of USD 1 billion tranche as well as the disbursement of USD 1.5 billion in program loans from the Asian Development Bank.
Official sources say the government has ordered a detailed investigation of the matter, seeking a report determining the exact volume of smuggling of dollar from Pakistan to Afghanistan along with solid evidence and recommendations to tackle the problem.
A senior official who dealt with Afghan issue told this scribe in background discussions that if any smuggling is indeed unearthed by the probe, the volumes will be small and insignificant. “This sort of thing might have happened on a city-to-city basis”, he said.
“Afghan citizens have billions of dollars parked in private bank accounts in the UAE and Turkey. The US dollar rate in Afghanistan hovers around PKR 100 against US dollar so there are no incentives for smugglers.”
In any case, the government has started a formal probe now in order to ascertain the veracity of the reports of capital flight from Pakistan.
Peshawar is considered a hub of money changers and currency dealers involved in the business of hundi and hawala playing a key role in the rampant smuggling of dollars from Pakistan to Afghanistan.
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