Rich Pakistanis rush to hoard dollars anticipating financial meltdown

By Mahua Venkatesh

New Delhi, Oct 20: Economic and political uncertainties along with devaluation of the Pakistani Rupee have led to a rise in hoarding of dollars by private citizens in the country. Not just that. Sources said that a large chunk of dollars is also being routed to cash starved Afghanistan through informal and Hawala routes.

The Pakistani Rupee traded at 173.4 to a dollar on Wednesday -- a record low. Pakistan's currency has been devaluing steadily since the middle of the year. With uncertainties unlikely to ease in the near future, sources said that the Pakistani Rupee could lose more sheen in the coming days.

Gulf News earlier that "the currency has lost so much of its value in the last four months, plummeting from 152 to a dollar to the current 173 that the experts are calling this the steepest fall in one span of time in the recorded history since the currency was linked to the dollar in the early eighties."

Recently, eyebrows were raised when about 100 individuals in Pakistan bought over $63 million from different exchange companies in Lahore, reported Dawn.

Rajiv Dogra, former diplomat and foreign affairs commentator told India Narrative that hoarding of dollars is nothing new in Pakistan but due to the current economic uncertainties under the Imran Khan government, the practice has further intensified.

"Hoarding of dollars in Pakistan is an established practice and the foreign currency is used by private citizens to buy properties outside the country, especially in the Middle East. But now the practice has increased even more due to the rising lack of confidence in the country's economy and there are apprehensions that the Pakistani currency will further devalue," Dogra said.

Besides, several Afghan refugees who are now settled in Pakistan have also been sending hard cash through informal channels as remittance for their families who continue to live in Afghanistan.

According to the United Nations Refugee Agency, there are more than 1.4 million Afghan refugees living in Pakistan.

"Large number of Afghan refugees would be remitting currencies back home for families and friends who are in need," Dogra added.

The Express Tribune in a report said that currency mafias have also resorted to smuggling US dollars out of the country and hoarding the greenback to create an artificial shortage of the currency by spreading rumours of a devaluation of the rupee.

Pakistan's economic challenges have risen significantly. The country's economy has taken a beating as Islamabad has been put on the Financial Action Task Force's (FATF) grey list since June 2018.

Pakistan, which had initiated talks with the International Monetary Fund (IMF) for a fresh tranche of loan for $1 billion also remained inconclusive.

Pakistan Prime Minister Imran Khan had promised economic growth and employment generation when he assumed power in 2018. But since he took over the macro-economic indicators have weakened. The debt level has also risen.

(The content is being carried under an arrangement with indianarrative.com)