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Should Pakistan discontinue the Rs5,000 currency note?

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2 years ago

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KARACHI: Former chairman of the Federal Board of Revenue (FBR) Shabbar Zaidi on Thursday insisted that the discontinuation of Rs5,000 note and curbs on the physical movement of dollars is key to curbing the cash economy in the country.

The financial expert made these remarks on Geo News show Aaj Shahzeb Khanzada Kay Sath just hours after a fake notification fuelled rumours among the people claiming that the government has decided to ban the note of the highest denomination.

Zaidi maintained that currency circulation is very high in Pakistan and the Rs5,000 note provides convenience in the cash economy, adding that people have kept wealth in their lockers in dollars and Rs5,000, which should be banned.

“What will a person do with cash dollars in Pakistan, if anyone is seen with the greenback, should be arrested until he proves where the dollars came from.”

50% of the people will not encash if they are asked to deposit the note in banks, Zaidi added, and cited the example of India which discontinued the Rs2,000 note some time ago in a bid to curb corruption.

He, however, suggested the authorities give some time to the holders so that they can exchange it.

“I spoke about shutting down exchange companies, now people have understood the reason behind it. The work of the exchange companies should be given to the banks, these companies will be abolished in a year. There are no exchange companies anywhere in the world except Dubai. By establishing exchange companies, the dollar has technically been made the currency of Pakistan.”

‘Discontinuation of Rs5,000 will create uncertainty’

On the other hand, former finance minister Miftah Ismail has strongly opposed the idea, saying the move will only create uncertainty and fear and will not solve the problem we are trying to address.

MIftah Ismail shared that the Indian economy suffered a setback of 1-2% due to this.

The former minister mentioned that people do find ways to avoid restrictions and every note of Rs2,000 was encashed in India.

“It is not proved anywhere in the world that discontinuation of currency stops corruption.”

Opposing Zaidi’s idea, Ismail said it would increase dollarisation.

He credited the appreciation in rupee value to an increase in confidence after the recent meeting of military leadership with the businessmen.

“Smuggling of petroleum products from Iran is necessary,” Ismail added.

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Robust activity lets PSX climb above 115,000 level again.

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On Friday, the Pakistan Stock Exchange (PSX) resumed its upward trend, crossing 115,000 points once more.

The PSX had strong action in the morning session, as the KSE-100 index increased by 1,000 points to 115,138.

The notoriously volatile PSX closed Thursday at 114,037 points, up 594 points.

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Meanwhile, in the interbank market this morning, the US dollar fell 7 paisas to Rs278.65 against the Pakistani rupee.

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SBP will announce monetary policy on January 27.

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5 months ago

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The State Bank of Pakistan (SBP) will release its monetary policy on Monday.

The Monetary Policy Committee (MPC) of the SBP will convene on the first day of the following week to make decisions on monetary policy.

The Monetary Policy decision will be announced by Governor SBP Jameel Ahmad at a news conference on the same day after the MPC meeting, according to an official release.

In December, the central bank reduced policy rates by 200 basis points (bps) to 13 percent.

“In November 2024, headline inflation fell to 4.9 percent year on year, meeting the MPC’s estimates. This decrease was mostly caused by the ongoing decline in food inflation and the phasing out of the impact of the gas tariff increase in November 2023,” SBP stated in an official release.

“However, the Committee noted that core inflation, at 9.7 percent, is proving to be sticky, while consumer and business inflation expectations remain volatile.” To that end, the Committee restated its previous assessment that inflation may remain volatile in the short term before stabilizing within the target range.

“At the same time, growth prospects have slightly improved, as evidenced by a recent increase in high-frequency indicators of economic activity.” Overall, the Committee concluded that its approach of gradual policy rate decreases is keeping inflationary and external account pressures under control while promoting long-term economic growth.

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Finance Minister Meets With World Leaders at World Economic Forum in Davos

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5 months ago

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During his attendance at the World Economic Forum in Davos, Switzerland, Finance Minister Muhammad Aurangzeb has met with officials of organisations and leaders of many nations.
Bangladesh’s Chief Advisor, Muhammad Younas, met with Mohammad Aurangzeb.
On the fringes of the World Economic Forum’s Annual Meeting 2025 Opening Banquet, there was an informal meeting.
Additionally, the Finance Minister met with Anwar Ibrahim, the Prime Minister of Malaysia.
Both leaders discussed economic cooperation and bilateral ties.
Muhammad Aurangzeb also had a meeting with Dp World’s Rizwan Soomro and Yuvraj Narayan.
They talked about how to strengthen Pakistan’s logistics and infrastructure systems to support trade.
“The Pakistani government is committed to advancing joint projects and values partnerships in both business-to-business and business-to-government cooperation,” the finance minister added.

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