“It is advised to fix the rupee/dollar exchange rate for export-import bills and remittances,” Zafar Paracha, general secretary ECAP said in a statement. “These remittance proceeds could be brought in by banks and money changers at a fixed rate of 240 per dollar”, he added.
The local currency ended at 228.34 per dollar, compared with the previous close of 228.15 in the interbank market. In the open market, the rupee was trading at 239 against the dollar. It was available at 238.50 on Friday. The rate of the dollar in the currency 'grey' market has reached between Rs. 267 and Rs. 270, as a dollar shortage has been wreaking havoc in the 'white' or authorized currency exchange markets.
Pakistan's currency has taken a consistent battering against the US dollar for 19 consecutive sessions, with losses in value at the end of each trading day
Paracha suggested the government offer a rate of Rs. 240 per dollar to overseas Pakistanis for inward remittances. The move could help increase remittances, reduce transfers through illegal channels (Hundi/Hawala), strengthen official recorded channels, and eventually eliminate the 'grey' market.
According to Paracha. For exporters’ proceeds, the offer could be made at Rs. 228 to the dollar, and the rate for importers could be based on the weighted average of home remittances and exporter rates. Paracha explained that this system would benefit exporters and attract more inward remittances.
“It will encourage exporters to bring dollars into the country, enhance the foreign exchange reserve, and strengthen the remittances segment of the exchange firms.”
Remittances from Pakistanis working abroad dropped 19% to $2.0 billion in December
During the first six months (July-December) of the ongoing fiscal year, Pakistan received $14.1 billion in remittances: a decrease of 11.1% from the same period a year earlier.
Forex reserves held by the State Bank of Pakistan dropped to $4.3 billion as of 6 January: barely enough to cover three weeks’ of imports. The country is currently experiencing a balance of payments crisis due to massive foreign debt repayments and a lack of external financing, which have depleted Pakistan’s forex reserves and resulted in a dollar shortage. Pakistan is desperately seeking loans and assistance from a multitude of financial institutions and friendly countries.
Importers are also facing extraordinary delays in receiving the requisite documentation from banks to clear their containers from Karachi port, as the financial sector attempts to constrict the outward flow of dollars. But this, in turn, is having further negative impacts on local retail markets.