The tremendous loss of dollars
SINCE the US stopped the war and the Taliban seized command last year, there has been a massive outflow of dollars from Pakistan to Afghanistan.
The change in the Afghan economy, according to several Pakistani exchange corporations, has had a significant impact on Pakistan’s weakening foreign economy.
Due to the trading and current account deficits, as well as the shrinking bilateral and multilateral inflows, there is an illegal transfer of dollars to Afghanistan, which has reduced Pakistan’s reserve of foreign currency.
A crisis has emerged in Pakistan as a result of the unrestricted flow of American dollars to Afghanistan.
Many exchange businesses noted the US restrictions on the Taliban Government and Kabul’s instruction to its citizens to exchange their large holdings of Pakistani rupees into dollars or other foreign currencies which had accelerated the flow of money toward Afghanistan.
Everyone is informed that Afghans are no longer allowed to have more than 500,000 in Pakistani currency and that anyone caught in violation of this restriction would be punished for breaching the anti-money laundering standards.
The State Bank has since added additional restrictions to limit tourists’ annual personal foreign currency limit at $6,000.
Unfortunately, it hasn’t been able to stop this illegal inflow of foreign exchange which exposes the corruption and weaknesses in the Customs check at the Pakistan-Afghanistan border.
Interestingly, up until today, no enforcement action taken to stop dollar smuggling all across the nation’s western border has produced the desired results, with the exception of the unexpected arrest for attempting to withdraw large amounts of hard cash.
One of the many reasons that led to market instability and the tremendous pressure Pakistan’s exchange rate has been under recently is the unauthorized dollar outflow, which has caused different exchange prices in the open and interbank markets.
There are different viewpoints on whether it is necessary to stop the illegal currency flows from the nation to Afghanistan.
Moreover, as proven by the arrest of three passengers going for the Gulf and the ability to recover $60,000 from them, the dollar outflow is not restricted to Afghanistan.
To stop the dollar from leaving Pakistan in any manner, Pakistan must strengthen its controls at its border crossings and ports.
—The writer is a social political analyst, based in Lahore.