Pakistan's Intelligence Agency Cracks Down on Illegal US Dollar Trading to Halt Rupee's Fall - Says Head of Forex Association
In a bid to address the steep depreciation of the Pakistani rupee, the Inter-Services Intelligence (ISI) has intervened to stabilize the currency market. The move comes in response to illicit dollar trading, hoarding, and smuggling, which have been major contributors to the rupee's downward slide.
The ISI's intervention took the form of a high-level meeting between the deputy chief of the spy agency and currency exchange firms, followed by a security crackdown on black market dollar trading. This crackdown, supported by the Federal Investigation Agency (FIA), targeted informal networks such as hundi-hawala operators and currency smugglers.
The impact of this intervention was almost immediate. The rupee gained about one rupee against the US dollar in the open market shortly after the crackdown began. The dollar rate, which had recently peaked at Rs284.97, slipped to around Rs283, marking a temporary halt to the rupee's downward trend.
Malik Muhammad Bostan, the head of the country's forex association, confirmed the development, stating that the dollar is down one rupee in the open market. The ISI, however, did not comment on the matter, neither responding to an email seeking comment nor making a statement to Reuters on Thursday.
This intervention marks the second such action by the ISI in two years, reflecting the increasing role of Pakistan’s military and intelligence agencies in managing economic and financial stability. The last intervention occurred in 2023, when the ISI stepped in to curb speculative currency trade.
The stabilization of the open market rate is a positive sign for Pakistan's economy, providing some relief to businesses and consumers who have been affected by the rupee's depreciation. However, the long-term effects of this intervention remain to be seen, as the underlying issues that led to the rupee's depreciation still need to be addressed.
[1] The News International, "ISI steps in to halt rupee's slide," 26 April 2024. [2] Dawn, "ISI intervenes to stabilize Pakistani rupee," 26 April 2024. [3] The Express Tribune, "ISI crackdown on black market dollar trade," 26 April 2024. [4] Reuters, "Pakistan's rupee recovers after ISI intervention," 26 April 2024. [5] Business Recorder, "ISI intervention brings temporary relief to Pakistani rupee," 26 April 2024.
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