ECAP says rising US dollar rate in open market swaying people towards hawala and hundi

Karachi: Exchange Companies Association of Pakistan (ECAP) reported a disparity between the dollar rate on Wednesday which was Rs107.30-60 in open market compared to Rs105.38-48 in the inter-bank market.

The higher differential between open and inter-bank market rates gives sway to illegal transactions via the hundi and hawala system, reported a local newspaper.

According to National Bank President Saeed Ahmed, illegal system of transactions like hawala and hundi were damaging remittances as a huge number of overseas Pakistani’s are lacking in knowledge about proper systems.

ECAP General Secretary Zafar Paracha was off the view that the actual reason for dollar appreciation was political uncertainty, keeping aside other factors. He added negative news regarding the country’s financial condition and depleting foreign exchange reserves, were impacting the exchange rate and devaluation rumours of PKR were unsettling market forces.

Paracha said due to rising disparity between open and inter-bank market rates was encouraging people to redirect remittances via illegal channels.

Remittances nosedived 34pc during September in comparison to August, which the currency dealers termed as ‘shocking.’