Money exchangers decide to remove ‘cap’ on US dollar to abolish grey market
In a significant development, the Pakistani government has given the green light for exchange companies to “free float” the dollar which will allow for a more flexible and market-driven exchange rate of the greenback.
The decision comes following an important meeting of exchange companies in Karachi.
The unanimous decision to remove the “cap” on the dollar means that starting tomorrow, the price of the dollar in the market will be determined by supply and demand.
This move is a mandatory condition of the International Monetary Fund (IMF) for the debt recovery program, according to experts.
The decision is expected to increase the value of the dollar, but it will also put an end to the grey market, which will be a positive development for the country’s economy.
Forex Association of Pakistan President Malik Muhammad Bostan said that a meeting with Deputy Governor of State Bank of Pakistan (SBP) Dr Inayat Hussain has been fixed on Wednesday morning.
During the meeting, an action plan would be formulated on the situation arising from making the dollar market-based; he added.
The plan includes measures to ensure that dollar remittance will be done through banking channels and the open market, instead of through the illegal practice of Hundi Hawala.
The exchange companies are ready to implement this decision, and the central bank will closely monitor the situation to ensure a smooth transition.