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Forex firms advise govt to fix higher dollar rate to boost remittances

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2 years ago

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  • ECAP believes the move will place curbs on illegal channels. 
  • Says it will eventually eliminate the prevailing grey market.
  • Rupee in the grey market has reached 267/270 against the dollar.

KARACHI: The Exchange Companies Association of Pakistan (ECAP) has advised the government to “fix” the dollar rate to reduce the volatility in the currency market as the country grapples with a severe economic crisis amid depleting forex reserves, reported The News.

“It is advised to fix the rupee/dollar exchange rate for export-import bills and remittances,” said Zafar Paracha, the general secretary of ECAP in a statement on Monday. These remittance proceeds could be brought in by banks and money changers at a fixed rate of 240 per dollar, he added.

The local currency ended at 228.34 per dollar, compared with the previous close of 228.15 in the interbank market. In the open market, the rupee was trading at 238.75 against the dollar. It was available at 238.50 on Friday.

Paracha suggested to the government to offer a rate of Rs240 per dollar to overseas Pakistanis and for inward remittance. He believes the move would help increase remittances, reduce Hundi/Hawala, strengthen the official channel, and eventually eliminate the grey market.

The rate of the dollar in the grey market has reached 267/270 versus the local unit, according to Paracha. For the purpose of getting the exporters’ proceeds, the offer could be made at 228 rupees to the dollar. And the rate for importers would be based on the weighted average of home remittance and exporter rates. It would benefit exporters and remittances, he explained.

“It will encourage exporters to bring dollars into the country, enhance the foreign exchange reserve, and strengthen the remittances segment of the exchange firms.”

Remittances from Pakistanis working abroad dropped 19% to $2.0 billion in December. 

During the first six months (July-December) of the current fiscal year, the nation received $14.1 billion in remittances, which is a decrease of 11.1% from a year earlier.

Pakistan’s forex reserves held with the State Bank of Pakistan dropped by $1.2 billion to $4.3 billion as of January 6 — enough to cover barely three weeks’ worth of imports.

The country is currently experiencing a balance of payments crisis due to large foreign debt repayments and a lack of external finance, which have severely depleted Pakistan’s foreign reserves and led to persistent dollar shortages.

The government has restricted several imports to save dollars, and some businesses have shut down as a result of being unable to import machinery or parts.

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In interbank trade, the Pakistani rupee beats the US dollar.

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6 days ago

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In the international exchange market, the US dollar has continued to weaken in relation to the Pakistani rupee.

The dollar fell to Rs278.10 from Rs278.17 at the beginning of interbank trading, according to currency dealers, a seven paisa loss.

In the meantime, there was a lot of turbulence in the stock market, but it recovered and moved into the positive zone. The KSE-100 index recovered momentum and reached 116,000 points after soaring 1,300 points.

Both currency and stock market swings, according to analysts, are a reflection of ongoing market adjustments and economic uncertainty.

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Business

Phase II of CPEC: China-Pakistan Partnership Enters a New Era

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1 week ago

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The cornerstone of economic cooperation between the two brothers and all-weather friends is still the China-Pakistan Economic Corridor, the initiative’s flagship project.

In contrast to reports of a slowdown, recent events indicate a renewed vigour and strategic emphasis on pushing the second phase of CPEC, known as CPEC Phase-2, according to the Ministry of Planning, Development, and Special Initiatives.

According to the statement, this crucial stage seeks to reshape the foundation of bilateral ties via increased cooperation, cutting-edge technology transfer, and revolutionary socioeconomic initiatives.

Planning Minister Ahsan Iqbal is leading Pakistan’s participation in a number of high-profile gatherings in China, such as the 3rd Forum on China-Indian Ocean Region Development Cooperation in Kunming and the High-Level Seminar on CPEC-2 in Beijing.

His involvement demonstrates Pakistan’s commitment to reviving CPEC, resolving outstanding concerns, and developing a strong phase-2 roadmap that considers both countries’ long-term prosperity.

At the core of these interactions is China’s steadfast determination to turn CPEC into a strategic alliance that promotes development, progress, and connectivity.

Instead of being marginalised, CPEC is developing into a multifaceted framework with five main thematic corridors: the Opening-Up/Regional Connectivity Corridor, the Innovation Corridor, the Green Corridor, the Growth Corridor, and the Livelihood-Enhancing Corridor.

With the help of projects like these, the two countries will fortify their partnership, and CPEC phase-2 will become a model of global economic integration and collaboration that benefits not just China and Pakistan but the entire region.

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The inflation rate in Pakistan dropped to its lowest level.

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1 week ago

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On December 2, core inflation as determined by the Consumer Price Index (CPI) significantly slowed, falling to 4.9% in November 2024 from 7.2 percent in October 2024.

The CPI-based inflation rate for the same month last year (November 2023) was 29.2%, according to PBS data.

Compared to a 1.2% gain in the prior month, it increased by 0.5% month over month in November 2024.

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