The State Bank of Pakistan (SBP) has identified the involvement of eight Pakistani banks in an unprecedented surge in the US dollar rate in Pakistan. These banks, including Habib Bank Limited, Allied Bank Limited, Bank Alfalah Limited, United Bank Limited, MCB Bank Limited, Bank Al Habib Limited, Meezan Bank Limited, National Bank of Pakistan, Askari Bank Limited, and Habib Metropolitan Bank, reportedly earned a combined profit of Rs27.8 billion from foreign exchange transactions in the first quarter of the fiscal year 2022-23, a figure they did not achieve in the entire fiscal year 2021-22. There are indications that more banks may be implicated in the coming days.
During the first three months of 2022, Allied Bank recorded a 79.55% increase in income from foreign exchange compared to the entire year of 2021, while HBL saw a 94.55% surge in foreign exchange income during the same period. Media reports suggest that these banks, along with some money exchange companies, exacerbated the situation as the US dollar started leaving Pakistan following a successful regime change operation in the country.
Despite the regulatory responsibilities of the SBP and Pakistan’s Finance Ministry, they have been criticized for their inability to effectively manage the situation. Former finance minister of Pakistan, Miftah Ismail, attributed the rising dollar rate to “market fundamentals” or “economic fundamentals.”
The new Finance Minister of Pakistan, Ishaq Dar, has pledged to bring the US dollar rate below Rs200, with the belief that a fair assessment suggests a rate of Rs190 to Rs195 per US dollar. However, the prevailing ground reality presents a different picture.