Currency dealers warned that replacing existing money exchange companies could backfire and allow banks to abuse the situation by manipulating the exchange rate.

Authorities have stated that they are under pressure to close down exchange companies because they are blamed for the rising dollar rate. According to Chairman Exchange Companies Association of Pakistan (ECAP) Malik Bostan, this is an entirely incorrect approach that would help the grey market make a more forceful comeback if exchange businesses close.

ECAP General Secretary Zafar Paracha lamented that banks weren’t penalized after SBP exposed them for currency manipulation. Paracha said SBP failed to bring charges against these banks because of the foreign investors’ element which persuaded the authorities to halt the investigation.

Overall, currency players argue that putting the currency business under one roof would allow banks to take advantage of the exchange rate more so when overseas investors control the majority of these banks.

Despite the complaints of the forex market, the larger consensus of public opinion supports the move. This change will streamline the industry and curb unlawful activities that have plagued the sector. Also, it will encourage larger and more established exchange companies to engage in transactions in a transparent and responsible manner.

Notably, large banks are establishing exchange companies with substantial capital backing, which is seen as a positive step towards resolving liquidity issues and ensuring the stability of the sector.

Besides NBP and HBL already in the game, MCB Bank, UBL, and Meezan Bank have recently announced the formation of exchange companies. Other banks are expected to follow suit in the coming weeks.

Source: Pro Pakistani