Pakistan faces currency devaluation against US dollar

Karachi, PTI | Updated : 28 July 2013, 10:32 AM

Pakistan's Finance Minister Ishaq Dar met the Governor of the State Bank and discussed the fast devaluation of the local currency against the US dollar in the money market in the last few days.

A government official said that the finance minister had also held a meeting with currency dealers to tackle the alarming situation.

The official said Dar had also expressed concern over the increasing difference between the Inter-bank and Kerb market rates recently.

"On Friday he met with the currency dealers and State Bank Governor and today with representatives of exchange companies. The currency dealers want a ban on gold imports that siphoned off dollars from the open market," he said.

Sources said that the meeting was held at the State Bank in the presence of the Governor to develop a strategy to deal with the fluid situation of the exchange rate regime.

Gold imports increased by 500 per cent since February this year.

Most of this gold is smuggled to India which has increased import duty on gold.

Pakistan has no duty on gold imports. Since banks do not provide dollars for gold imports, importers buy dollars from the open market.

Malik Bostan, the Chairman of the Exchange Companies Association of Pakistan (ECAP) said that this was an alarming situation since in February this year the gold import stood at 280 kilos per month which is now 1,400 kilos per month.

He said because of this the dollar demand had increased from USD 20 million per day to USD 40 million per day while the size of the market is estimated around USD 20 million. In the first 50 days of the present government, rupee lost 4.5 per cent in the open market and 2.4 per cent in inter-bank against the US dollar.

First Published: Sunday, July 28, 2013 10:31 AM
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