Dubai rupee devaluation alarm – Journal

KARACHI: Hawala operators in Dubai are selling the dollar for Rs 187-89 (at a premium of three to four percent over rates in Pakistan), leading to a drop in official remittances from Pakistanis working in the United Arab Emirates.

In Pakistan, the dollar was trading around Rs 181 on the open market, against Rs 178 on the interbank market on Friday.

Local currency exchange companies claim that the dollar rate in Dubai is considered to be the real value of currency in Pakistan, especially in the open market.

Read: The Rupee slide – some points to think about

The open market generally sells the greenback at Rs2-3 higher than the interbank market.

Local dealers link drop in UAE remittances to increase in hawala

“There is a big gap between dollar prices in Dubai and Pakistan. Dubai-based hawala operators sell US currency for Rs 187-89, attracting many Pakistanis to send their income through the system, ”said Zafar Paracha, secretary general of the Association of Foreign Exchange Companies of Pakistan.

He said the Pakistani market might view the exchange rate as the real rate, which could lead to further devaluation of the rupee.

The State Bank could not be reached for comment.

Hawala money transfer companies operate under a system that allows customers to quickly transfer large sums across borders outside of the control of regulators.

The trust-based money transfer system has long been the banking system of choice for many people in Pakistan, but many businesses are unregulated and once the money leaves the country it is difficult to follow him.

Worrying for the government, remittances from Pakistanis living in Dubai have been declining since July amid increasing use of hawala.

Official data shows Dubai’s remittances were $ 530.6 million in July, $ 512.3 million in August, $ 502 million in September, $ 455.9 million in October and 452 , $ 5 million in November.

One of the reasons for the high dollar in Dubai is that Afghans and some Central Asian countries pay Pakistani exporters in dollars purchased from Hawala operators.

Pakistani exporters who purchase goods for an Afghan importer must deposit the full dollar amount equal to the exportable goods in a Pakistani bank. Exporters buy dollars in the local currency market, cheaper than Dubai, and deposit them in a Pakistani bank.

In fact, Afghans make their payments to Pakistani exporters in rupees at the rate of Rs 187-189 instead of dollars.

“Afghanistan and the countries of Central Asia are doing it because they don’t have dollars,” said Malik Bostan, president of the Pakistan Association of Exchange Companies.

He said he recently briefed senior government officials, including the advisor to the Prime Minister of Finance and Revenue, Shaukat Tarin, of the alarming situation since the illegal trading system has been strengthening.

“We used to buy foreign currencies for an amount of $ 10-12 million a day, but it has now fallen to just $ 3-4 million. These currencies are officially taken to Dubai to bring the dollar back to the value of foreign currencies, ”he said, adding that this had deprived the country of a reasonable amount of US currency.

“I have alarmed the authorities that if this is not stopped, the country could lose up to $ 2 billion in remittances in the near future,” said Bostan.

Posted in Dawn, le 19 December 2021

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