The Exchange Companies Association of Pakistan (ECAP) announced on Tuesday that it would remove the cap on the US dollar from January 25 (today).
The exchange rate has been primarily hit hard by a steep decline in the central bank’s foreign exchange reserves, which have shrunk to $4.6 billion. Currency experts say the rupee has been falling “despite being managed” by the State Bank of Pakistan (SBP).
Amid a shortage of dollars, the gap between its rates in the interbank and open markets has significantly widened, drastically hurting the economy and diverting remittances from the legal banking channel to the grey market.
Some experts have hinted that the shortage of dollars could cause rationing of petrol and diesel in the next two to three months, ultimately hitting the trade and industry and even the agricultural sector, which needs diesel during the harvesting season.
On Tuesday, ECAP Chairman Malik Bostan chaired a meeting of the association that was also attended by General Secretary Zafar Paracha.
In a detailed statement issued after the meeting, Bostan said that the decision to cap the dollar rate had proved to be “negative”.
“Instead of falling, the dollar rate increased, resulting in the unavailability of the greenback in the market which also gave birth to the black market.”
He further lamented that citizens that wished to buy dollars for travelling or funding their education and health expenses were not able to do so and had to turn to the black market.