USD smuggling adds to pressure on weaker rupee

Islamabad: Smuggling of US dollars from Pakistan to Afghanistan continues through carriers - agents, truck drivers and sometimes children - further adding to the ongoing pressure on a weakening Pakistani currency.

This was revealed to Business Recorder by dealers associated with the business of foreign exchange both at the Torkham and Chaman border-crossings during background discussions.

They further maintained that sending more than the government-permitted limit of up to $ 10,000 to Afghanistan through local agents was continuing. "The agents often use local children who frequently cross the border unchecked by border authorities," a dealer said on condition of anonymity, who also did not rule out the possibility of connivance of the officials

Furthermore, they maintained that truck drivers are also engaged in smuggling dollars into Afghanistan in return for money from Afghans on Pakistan side of the border.

A senior customs official while talking to Business Recorder, on condition of anonymity, said that the Federal Board of Revenue (FBR) recently issued instructions to the border custom stations to remain extra vigilant to avert any attempt of smuggling of dollars into Afghanistan.

'Demand-side pressure' drives Pakistani rupee to 12-month low

He ruled out any possibility of taking foreign currency through illegal means from Pakistan. "All passengers' data on currency declaration is being electronically maintained," he added.

Malik Bostan, Chairman, Forex Association of Pakistan (FAP), told Business Recorder that the dollar outflows continue unabated, which is putting pressure on the Pakistani currency.

When asked about the preferred channel for sending money to Afghanistan, he ruled out the possibility of using hawala/ hundi, saying that money is being sent through legal channels. "The government has allowed taking up to $10,000 to resident and non-resident Pakistanis per visit; and some people have made it their business - they take $2000-$3000 per day, and sell them in Afghanistan at a profit," he said.

He said that Afghan nationals based in Pakistan are buying $1.5 to 2 million daily from the open market and taking it to their country since the American currency is now in a short supply in Afghanistan.

Bostan further contended that the entire banking system of Afghanistan remains shut. Before the fall of Kabul, Pakistan was the recipient of $5 to $7 million per day from Afghanistan, he added.

Currently, he added that there is a shortage of edible items including wheat, sugar and medicines in Afghanistan and all of these items are going from Pakistan.

He said that Pakistan imports were $5.5 billion in July 2021, which jumped to $6.5 billion in August - the major reason being that these items are in short supply in Afghanistan.

Copyright Business Recorder, 2021