The Pakistani currency is under pressure owing to the ongoing political unrest in the
country and the smuggling of US dollars to Afghanistan, media reports said Tuesday.
Pakistan is currently dealing with problems on several fronts, the political crisis being the first and
biggest one. The dollar crisis is also connected with it,” Malik Bostan, the Chairman of the
Exchange Companies Association of Pakistan (ECAP), said at a news conference, The News
reported.
About $2 billion goes to Afghanistan from Pakistan in the form of official and unofficial trade,
misuse of Afghan transit trade, smuggling and through the borders, claimed Bostan, adding that
these factors are burdening Pakistan’s foreign exchange reserves.
Currently, Pakistan’s economy is suffering irreparable harm because of the Afghan transit trade,
which has grown significantly. A significant portion of the dollars travelling from Pakistan to
Afghanistan passes through the Afghan transit trade, and both Afghan and Pakistani traders are
involved in this anti-national activity, he added, The News reported.
To lower the import bill, the government imposed high duties on many luxury goods.
“Our traders and importers thought that why should they pay a 200 per cent duty to the Pakistani
government,” Bostan said, adding that they operate a global network, accepting payments through
hundi/hawala in Dubai, London, Europe, America, Saudi Arabia, and everywhere else.
“They bring their items here in the name of Afghan transit, travelling from our port to Afghanistan
and then returning to Pakistan in small trucks. Numerous importers from Pakistan who participate
in this atrocious practice not only fail to pay import duties, which costs the national exchequer
billions of rupees, but also prevent dollars from entering the country,” he said.
When the Afghan Taliban established a transition government in August 2021, the Pakistani rupee
was trading at 155, the country’s foreign exchange reserves were $22 billion, and its import bill was
$4.5 billion. According to Bostan, today the rupee has fallen to almost 225 in the interbank market
and 235 per dollar in the free market, The News reported.
He claimed that every month, about $3 billion in remittances were sent to Pakistan. The remittance
flows have now decreased to $2 billion.
“Where does this monthly $1 billion go? Because we are paying remittances at 225 rupees for
every dollar, this $1 billion per month has become the sight of Afghan transit. The hawala/hundi
operators are giving those 270 for every dollar,” Bostan said