20 Percent rise in Foreign Remittances expected amid crackdown

September 20, 2023

Malik Bostan, Chairman of the Exchange Companies Association of Pakistan (ECAP), is optimistic that the country’s remittances could see a significant increase of up to 20% in light of the government’s crackdown on hoarders, black market traders, and dollar smugglers.

According to Bostan, the foreign exchange companies, which were previously receiving approximately $5 million per day, have experienced a remarkable surge, now averaging $15 million per day. This reflects a remarkable 200% increase due to the ongoing crackdown. Consequently, the interbank and open market exchange rates for the US dollar have considerably decreased, stabilizing at around Rs 295. He further assured that if the crackdown continues, the dollar’s value could drop below Rs 250.

Bostan revealed that the crackdown on hoarders, black market operators, and dollar smugglers has also unveiled a disturbing nexus between these entities and certain banking staff. A significant amount of dollars, he alleged, had been concealed in the lockers of various banks. Corrupt bank employees, in coordination with black market operators, used these hidden funds for illegal hawala and hundi transactions. Bostan disclosed that the corrupt bank staff members possessed the keys to these lockers, allowing them to engage in illicit US dollar trading upon receiving instructions from black market operators. He claimed that multiple First Information Reports (FIRs) have been filed against the bankers involved in these unlawful activities.

Bostan emphasized that the illegal dollar trade has also led to corruption among importers and exporters. He cited a prevalent practice of over-invoicing among importers and under-invoicing among exporters, solely for the purpose of illegal dollar trading. Importers, through their over-invoicing, send more dollars abroad, while exporters, through under-invoicing, leave a significant portion of their dollars in foreign banks. This detrimental practice negatively impacts Pakistan’s foreign exchange reserves.

Additionally, Bostan shed light on the smuggling of dollars to Afghanistan and asserted that maintaining constant vigilance over illegal dollar trading in all its forms would assist Pakistan in bolstering its foreign exchange reserves.