Al Mayadeen English

  • Ar
  • Es
  • x
Al Mayadeen English

Slogan

  • News
    • Politics
    • Economy
    • Sports
    • Arts&Culture
    • Health
    • Miscellaneous
    • Technology
    • Environment
  • Articles
    • Opinion
    • Analysis
    • Blog
    • Features
  • Videos
    • NewsFeed
    • Video Features
    • Explainers
    • TV
    • Digital Series
  • Infographs
  • In Pictures
  • • LIVE
News
  • Politics
  • Economy
  • Sports
  • Arts&Culture
  • Health
  • Miscellaneous
  • Technology
  • Environment
Articles
  • Opinion
  • Analysis
  • Blog
  • Features
Videos
  • NewsFeed
  • Video Features
  • Explainers
  • TV
  • Digital Series
Infographs
In Pictures
  • Africa
  • Asia
  • Asia-Pacific
  • Europe
  • Latin America
  • MENA
  • Palestine
  • US & Canada
BREAKING
Al Mayadeen correspondent: The US vetoed a UNSC resolution calling for a ceasefire in Gaza, arguing it does not condemn Hamas nor grant "Israel" the right to “self-defense.”
Israeli occupation forces issue a new bombing threat against civilian buildings in the Southern Lebanese towns of Borj Qalaouiye and Chehabiyeh.
Sources to Al Mayadeen: Extending the snapback mechanism deadline will test how independent Europeans truly are from the US.
Sources to Al Mayadeen: Activating the snapback mechanism will nullify the Cairo Agreement, shut the door on cooperation between the IAEA and Tehran, and bar inspections.
Sources to Al Mayadeen: The diplomatic window remains open, but signs of activating the snapback sanctions mechanism on Iran are increasing.
Sources to Al Mayadeen: Although the Cairo Agreement meets an important part of European demands, they have begun speaking of new conditions in recent communications.
Sources to Al Mayadeen: European countries show no independence in their stance toward Iran during the talks.
Israeli occupation forces issued bombing threats to bomb civilian buildings in Southern Lebanon.
Israeli media: Person behind shooting operation at Allenby Crossing is a Jordanian Army soldier.
Israeli media citing Emergency Services: Both wounded in Allenby shooting operation now dead.

Currency smuggling to Afghanistan drains Pakistan's foreign exchange reserves

  • F.M. Shakil F.M. Shakil
  • Source: Al Mayadeen English
  • 30 Dec 2022 23:44
  • 2 Shares
6 Min Read

Pakistan's finance minister has said in public that hundi-based currency dealings, speculative activities, and gambling are holding the country's financial system hostage and have brought foreign exchange reserves down to the bare minimum.

  • x
  • Currency smuggling to Afghanistan drains Pakistan's foreign exchange reserves
    The Exchange Companies Association of Pakistan (ECAP) said on Monday that there has been a significant outflow of US dollars from Pakistan to Afghanistan since the Taliban's takeover of Kabul last year

Pakistan's foreign exchange reserves are quickly running out because US dollars are being smuggled into Afghanistan without any restrictions. This has forced Islamabad to put strict rules on imports and foreign currency transactions.

The fast-depleting reserves turned worse last week when the State Bank of Pakistan's (SBP) reserves dropped to an alarming level of $6 billion, the lowest since April 2014. The liquid foreign reserves held by the country stood at $12 billion as of December 16, including $5.88 billion held by commercial banks operating in the country.

Dollar shortage

The situation has gotten so bad that for the past few months, the central bank has not had enough cash on hand to pay the wages of its overseas embassies. However, the SBP claimed that the decline in reserves was the result of payments on external debt. It failed to explain why Pakistan's long-term sovereign credit rating was downgraded by S&P Global from "B" to "CCC+," indicating that the nation's external, fiscal, and economic metrics are continuously deteriorating. 

The foreign office is currently in a crisis-like situation as a result of Pakistan not having adequate reserves in its national coffers to pay the salaries for its missions abroad. This is because the country's finance ministry refused to grant funds despite repeated pleas.

When questioned about the situation on Thursday, a spokesperson for the Foreign Office (FO) said that Pakistan's missions abroad will soon start getting their salaries again. She added that the disbursement had been suspended because of a "very complicated" problem that the Ministry of Finance, the State Bank, and international channels were dealing with. She claimed that all missions abroad would soon receive the appropriate funding.

Exchange companies warning

The Exchange Companies Association of Pakistan (ECAP) said on Monday that there has been a significant outflow of US dollars from Pakistan to Afghanistan since the Taliban's takeover of Kabul last year. This confirms what has been a well-kept secret for months in Pakistan.

Related News

The US economy and global markets find themselves in a real pickle with Trump's oscillation

Iran's plan to establish BRICS-wide currency could change global trade dynamics

ECAP Chairman Malik Bostan stated at a press conference that Pakistan's foreign exchange reserves have been weakened by this situation. He claims that the currency rate has been impacted by dollar smuggling, phony imports, Islamabad's lack of concern for the issue, and some other factors.

Bostan noted that Pakistan's reserves were $22 billion and that one dollar was available for Rs. 155 when the Taliban seized control of Kabul. As of right now, the reserves are at their lowest point in around eight years. On the interbank market, a dollar now costs Rs. 225. "This unchecked flow of US funds toward Afghanistan has sparked a catastrophe in Pakistan," he added.

It transpired in the press conference, which was covered by Al Mayadeen English, that because Islamabad permitted Afghans to take $1000 per person per day and while 15,000 Afghans daily travel to Pakistan from the neighboring nation, thus, 15 million dollars are legally going to Afghanistan from Pakistan every day.

According to Bostan, it is illegal in Kabul to possess more than 0.5 million Pakistani rupees, and anyone found in possession of amounts above this limit faces prosecution under the money-laundering law. He claimed that the Kabul government had directed the Afghan business community to convert Pakistani rupees into dollars or other currencies.

"Afghans have been trading in Pakistani rupees for 42 years and possess hundreds of billions of rupees, which if converted into dollars and funneled back to Afghanistan, the currency market and economy would hit the rock bottom. They will drain off the entire dollar from Pakistani markets," Bostan warned, adding that Pakistan should take up this issue with Kabul.

Official version

Pakistan's finance minister has said in public that hundi-based currency dealings, speculative activities, and gambling are holding the country's financial system hostage and have brought foreign exchange reserves down to the bare minimum.

At a seminar in Islamabad last week, Senator Mohammad Ishaq Dar revealed that a significant sum of money is being smuggled out of Pakistan, mostly to its neighboring country, depleting the foreign exchange reserves. The senator warned that if no action is taken by the government, the situation will spiral out of control and put increasing strain on the nation's foreign exchange reserves. Dar also declared a clampdown on currency smugglers and holders of the illegal currency.

Swoop on smugglers

To stop the flow of money to Afghanistan, the authorities quickly began a full-fledged operation in the nation's largest cities. The Federal Investigation Agency (FIA) was dispatched to raid major cities, particularly Peshawar, which is close to the Afghan border, in a major effort to prevent people from smuggling money, especially dollars.

The Commercial Banking Circle (CBC) authorities of the FIA reported that since January 1, 2022, the organization has conducted about 257 raids and detained 305 people who are allegedly connected to the Hundi business in Peshawar. Additionally, they said that anyone caught smuggling money faced the appropriate legal penalties. The authorities claimed that so far, they have recovered local and international money totaling Rs. 666 million. Additionally, four plazas in Peshawar were sealed by the authorities on Sunday for operating illegal currency enterprises.

The agency detained many agents in Lahore who were engaged in unlawful "hundi" transactions, including the purchase and selling of foreign cash. The FIA raided them, took a sizable sum of foreign cash from them, and closed down several businesses that were engaged in the illicit sale and purchase of dollars.

Economic experts claim that the SBP’s rupee-dollar interbank parity of Rs. 224 will break at some point in the not-too-distant future. When the parity is broken, the rupee will depreciate significantly, causing widespread economic disruption. This means that Islamabad is bracing for a 20 to 25% depreciation, while the central bank is adamant about maintaining the current parity even though the dollar is not available in the open market at Rs 250. 

The views expressed in this article are solely those of the author and do not necessarily reflect Al Mayadeen’s editorial stance.
  • economy
  • Afghanistan
  • Taliban
  • Pakistan
F.M. Shakil

F.M. Shakil

Freelance Journalist

Most Read

All
Why is Choose Love using a firm with British and US intelligence connections to run a pro-Palestine musical event? (Al Mayadeen English; Illustrated by Batoul Chamas)

Together for Palestine: Troubling questions about the organisers of this huge event

  • Opinion
  • 17 Sep 2025
UKLFI’s latest faux pas, like "Israel’s" recent failed attempt at regime change in Iran, is unambiguously indicative of a flailing entity on the verge of extinction. (Al Mayadeen English; Illustrated by Zeinab el-Hajj)

Zionist lawfare operation facing collapse?

  • Opinion
  • 13 Sep 2025
In the immediate aftermath of Parubiy’s slaying, claims emerged he had months earlier requested formal protection from the SBU, only to be rebuffed. (Al Mayadeen English; Illustrated by Batoul Chamas)

The Ukrainian neo-Nazi who knew too much?

  • Opinion
  • 5 Sep 2025
The West Bank is on the verge of catastrophe

The West Bank is on the verge of catastrophe

  • Opinion
  • 9 Sep 2025

Coverage

All
War on Iran

More from this writer

All
US losing India to China-Russia bloc, as SCO summit rang alarm bells

US losing India to China-Russia bloc, as SCO summit rang alarm bells

Yet another assault on Gaza under Trump-Nethanyahu’s strategic planning

Yet another assault on Gaza under Trump-Nethanyahu’s strategic planning

India's hand in the Balochistan quagmire was already exposed when its Naval Commander was caught red-handed in 2016, tangled up with terrorist outfits to stir the pot in Pakistan and Iran. (Al Mayadeen English; Illustrated by Zeinab el-Hajj)

Iran–Pakistan consensus on tackling Balochistan militancy

Trans-Afghan Railway Corridor set to change regional trade landscape

Trans-Afghan Railway Corridor set to change regional trade landscape

Al Mayadeen English

Al Mayadeen is an Arab Independent Media Satellite Channel.

All Rights Reserved

  • x
  • Privacy Policy
  • About Us
  • Contact Us
  • Authors
Android
iOS