Pakistan takes tough measures against illegal dollar trading after rupee weakness

Pakistan is cracking down on illegal dollar trading after the rupee hit a new record low since the beginning of September and these measures have shown initial signs of success.

“The campaign targets people involved in illegal dollar trade and ongoing smuggling operations,” information minister Morteza solanji said in a mobile message on Friday, Bloomberg reported.

Illegal transactions include buying or selling dollars without any record and money transfers through unofficial channels. The Federal Investigation Agency raided exchange offices in Karachi and arrested at least five people this week involved in illegal dollar transactions, according to agency spokesman Mohammad Alim.

The government is also deploying plainclothes security officials at exchange offices to monitor dollar sales, said Dhofar parasha, secretary general of the Federation of exchange companies of Pakistan.

The crackdown has pushed the rupee up nearly 10 percent in the retail market this week, easing pressure on the main interbank market.

The Pakistani rupee is the worst performing Asian currency during the quarter, losing almost 6% against the dollar, and set a new record low in September. The Central Bank of Pakistan this week asked leading banks to participate in foreign exchange activities expected to increase compliance. Further action is expected as Pakistan’s central bank is likely to raise interest rates next week, with some bond investors expecting an increase of 200 basis points (2%) or more.

The Pakistani currency rose 0.7% to 302.7 rupees to the dollar on Friday after touching a record low of 307.25 this week, according to data compiled by “Bloomberg”.