Pakistan’s Bold Move: Restricting Cash Dollar Transactions
In a controversial yet strategic move, Pakistan’s central bank has implemented strict measures to control the flow of US dollars, aiming to stabilize its currency and curb undocumented financial activities.
The Core Issue: Preventing Rupee Devaluation
Pakistan’s central bank, the State Bank of Pakistan (SBP), has taken a firm stand to protect its currency, the rupee, from further devaluation. By limiting cash dollar transactions, the bank aims to prevent the uncontrolled outflow of dollars, which could have severe consequences for the country’s economy.
But Here’s Where It Gets Controversial…
The SBP has issued directives to banks and currency exchange dealers, instructing them to restrict cash payments in dollars. Customers without foreign currency accounts are now unable to receive cash dollars, and even those with such accounts face limitations.
A Shift Towards a Cashless Economy
The SBP circular emphasizes the promotion of a cashless economy. All foreign currency sale transactions for deposit into FCY (foreign currency) accounts will now be executed through direct account-to-account transfers. This means individuals can no longer receive cash for their dollar purchases; instead, the funds will be directly transferred to their accounts.
The Impact on Individual Buyers
For individual buyers, the new regulations mean they can only purchase up to USD 500 in cash without providing additional documentation. Any amount exceeding this limit requires proof of purpose and supporting documents, along with biometric verification. Even travelers going for Hajj, Umra, or studies are not exempt from these requirements.
The Euro and Pound Scenario
Currency experts highlight that individuals purchasing euros or pounds will face longer delays. Any such transactions will be issued via cheque, which can take up to a week to clear if deposited into the buyer’s FCY account.
The Reasoning Behind the Restrictions
Sardar Naseem, an official from Galaxy Exchange, suggests that these instructions are aimed at controlling the outflow of dollars and preventing money changers from holding large cash dollar amounts in banks’ accounts. By implementing these measures, the SBP aims to ensure that money changers sell directly in the banking market, enhancing transparency and control over foreign currency transactions.
A Thought-Provoking Question for Our Readers
Do you think these restrictions are necessary to stabilize Pakistan’s economy, or do they impose unnecessary limitations on individual financial freedom? Share your thoughts in the comments below!