Pakistani rupee is experiencing a free fall these days as the exchange rate has touched Rs 117 against a US dollar in the open market though the inter-bank exchange rate still remained stable. The media reports suggest the dollar has hit the highest rate for the second time after it closed at Rs 117 almost a month ago, on March 20, when rupee was depreciated by 4.5 percent in the inter-bank market in a single day. According to the currency dealers, the demand for dollar has increased partly because of the investment of undeclared money in the local market while the holders of black money also prefer to invest in the US currency to avoid the money laundering issues. The black money is mostly used for investment in the property sector and the subterranean currency market is thriving after the prime minister announced amnesty scheme. According to the amnesty scheme, a property deal up to Rs 4 million is not possible without declaring the source of income. When such schemes are launched, the bureaucracy intentionally adds a few sections to the law to foil the whole exercise.
As rupee had already been vulnerable due to certain government actions, the undeclared legal and illegal money is chasing the dollar since amnesty scheme was announced earlier this month. The smuggling of currencies has increased manifold as the scheme has provided a last time opportunity to the corrupt elements to whiten their assets without going to through the official rigmarole. The short supply of dollar has also increased its demand in the open market. The depreciation of rupee always caused thrill in the financial sector and the new scheme has changed the dynamics of the financial economy. The depreciation of rupee value has increased the values of all the currencies in the open market. People have now started transferring their ill-gotten money to Dubai to bring it back to Pakistan in the form of dollar and whiten it under the scheme. Reports indicate heavy buying of dollars by smugglers at higher rate continues which created shortage of the currency in the local market. Others are investing in prize bonds, gold and attractive investment schemes, lending credence to the notion that the policymakers leave no opportunity to spoil the economy. If the current fall in the value of Pakistani currency continues, it would reverse all the economic gains claimed by the PML-N government during the four and half years.
