The State Bank of Pakistan (SBP) started a crackdown on exchange companies (ECs) in its efforts to stabilize the rupee.
Due to the ongoing mystery shopping, volatility in the exchange rate and the difference between the interbank and open market rates, the central bank has increased monitoring of ECs along with foreign exchange operations.
According to a statement of SBP, it started the inspections of exchange companies on August 1.
Banks had been charging higher exchange rates than the rates of SBP. Some importers were being able to open Letters of Credit (LCs) whereas others not being able to get dollars were having difficulties in opening LCs even from outside banking channels. The factors have been suggesting that banks were involved in minting money.
According to the SBP statement, because of violations of regulations, four branches of two ECs namely Galaxy Exchange Co and Al-Hameed International Money Exchange Co were suspended. Arrangements of 13 franchises of six different ECs have also been stopped.
Mystery shopping has been started by the SBP to check if ECs were selling foreign currency to their customers.
A meeting of the Exchange Companies Association of Pakistan has been called for August 4.
