Abb Takk News

Exchange Companies Remove Dollar cap to dent grey Market

KARACHI: In a major decision, the Exchange Companies Association of Pakistan (ECAP) has decided to remove the cap on the US dollar, effective from today (Wednesday), hoping to end the surging “artificial” demand for the greenback in the market.

The dollar is currently being traded at three different rates — the official rate of the State Bank of Pakistan, the exchange companies’ rate, and the rate in the black market.

In a statement on Tuesday, after a meeting of the ECAP members, the association said it was withdrawing the cap on the US dollar as the limit was causing adverse effects.

“There was artificial demand in the market as people would buy the dollar from us and sell it in the grey market,” the association’s statement mentioned, highlighting the impact of different rates.

As a result of the people opting for this, the business was shifting from official channels to the grey ones, hurting not only the reserves but also dealing losses to the exchange companies.