Exchange companies remove US dollar cap, market itself to determine rate

KARACHI (92 News) - The Exchange Companies Association of Pakistan (ECAP) has decided to remove the cap on the US dollar, allowing the market itself to determine the rate.

The decision was made during a meeting on Tuesday. Talking to the media after the meeting, ECAP chairman Malik Bostan said that the decision to cap the US dollar to stop its price proved to be wrong. "The business of black marketing and 'hawala hundi' of dollar increased due to the cap," he said.

Malik Bostan said that the association was withdrawing the cap on the US dollar in the 'nation's interest' 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," he added, highlighting the impact of different rates.

The ECAP chairman said that the exchange companies had no dollar and remittances had reduced to US$3 billion from US$2 billion.

ECAP secretary general Zafar Paracha said that there had been an artificial demand in the market after capping the dollar and the people were selling the dollar in the grey market after purchasing it.