ISLAMABAD: Pakistan has launched an operation against dollar hoarding and currency speculation trade, information minister Fawad Chaudhry said on Friday, in a bid to stabilize the exchange rate which has lost about 25 percent of its value over the past year.
The announcement came just hours after finance minister Asad Umar ruled out a further devaluation of the rupee, urging people to invest in the stock market and not waste money buying dollars.
“Government has directed FIA [Federal Investigation Agency] to launch a full fledged operation against Dollar hoarding, and speculative currency trade,” the information minister said in a Twitter post. “The operation is being launched in coordination with State Bank and Ministry of Finance.”
The FIA is empowered under the Foreign Exchange Regulation Act to initiate action against illegal money changers and export of the dollars through illegal means.
“We have to wait for the government’s instruction for the crackdown against dollar hoarding,” Abid Qamar, a spokesman for the State Bank of Pakistan, told Arab News, declining further comment.
Pakistan’s consumer price inflation rose in March to its highest since November 2013, adding to economic headwinds besetting Prime Minister Imran Khan’s government.
Inflation rose to 9.41 percent year-on-year, up from 8.21 percent in February, lifted by sharp rises in food, fuel and transport costs that have squeezed household budgets.
Last month, the central bank lifted its key policy rate by 50 basis points to 10.75 percent, citing continuing inflationary pressures as well as high fiscal and current account deficits.
Consumer price inflation has also jumped sharply over the past year, climbing from under 4 percent at the start of 2018.
Energy costs in particular have risen sharply, hit by a series of devaluations of the rupee, and the government on Sunday announced a 6 rupee rise in petrol prices to 98.88 rupees a liter.
Traditionally, Pakistan has kept its exchange rate over-valued, incurring losses to the economy, the finance minister said. The rupee should be aligned with its fundamentals and its benchmark should be the real effective exchange rate (REER), finance minister Umar said on Friday.
He added that there were no demands for what the exchange rate should be in the talks with the IMF.
Zafar Paracha, general-secretary of the Exchange Companies Association of Pakistan, said the crackdown against dollar hoarding would not help bring down the exchange rate unless the government controlled it in the interbank market.
“The government should first amend the foreign exchange regulation act to set a certain limit on the amount of foreign currency or rupees that one can keep at home,” he told Arab News.
He said the FIA crackdown against illegal money changers, “who have been enticing people to buy dollars” may be effective for some time but that is not a permanent solution to deal with it.
The Forex Association of Pakistan on Friday urged all exchange companies in the country to sell the US dollar to only “authentic customers who need the dollar genuinely” including people going abroad for medical treatment, education and pilgrimage.
“If people stop buying the dollar for a few days, its exchange rate will come down automatically,” Malik Bostan, president Forex Association of Pakistan, told Arab News.
“The dollar is currently appreciating due to the gap in supply and demand … the supply of the dollar at the moment is four to five million dollars daily against the demand of seven to eight million dollars,” he said, “The government should focus on addressing this gap instead of creating further panic in the market through crackdown.”
Pakistan launches operation against dollar hoarding to stabilize exchange rate
Pakistan launches operation against dollar hoarding to stabilize exchange rate
- Operation aimed at stabilizing the exchange rate which has lost about 25 percent of its value over the past year
- State bank and finance ministry will jointly coordinate the crackdown
IMF warns against policy slippage amid weak recovery as it clears $1.2 billion for Pakistan
- Pakistan rebuilt reserves, cut its deficit and slowed inflation sharply over the past one year
- Fund says climate shocks, energy debt, stalled reforms threaten stability despite recent gains
ISLAMABAD: Pakistan’s economic recovery remains fragile despite a year of painful stabilization measures that helped pull the country back from the brink of default, the International Monetary Fund (IMF) warned on Thursday, after it approved a fresh $1.2 billion disbursement under its ongoing loan program.
The approval covers the second review of Pakistan’s Extended Fund Facility (EFF) and the first review of its climate-focused Resilience and Sustainability Facility (RSF), bringing total disbursements since last year to about $3.3 billion.
Pakistan entered the IMF program in September 2024 after years of weak revenues, soaring fiscal deficits, import controls, currency depletion and repeated climate shocks left the economy close to external default. A smaller stopgap arrangement earlier that year helped avert immediate default, but the current 37-month program was designed to restore macroeconomic stability through strict monetary tightening, currency adjustments, subsidy rationalization and aggressive revenue measures.
The IMF’s new review shows that Pakistan has delivered significant gains since then. Growth recovered to 3 percent last year after shrinking the year before. Inflation fell from over 23 percent to low single digits before rising again after this year’s floods. The current account posted its first surplus in 14 years, helped by stronger remittances and a sharp reduction in imports. And the government delivered a primary budget surplus of 1.3 percent of GDP, a key program requirement. Foreign exchange reserves, which had dropped dangerously low in 2023, rose from US$9.4 billion to US$14.5 billion by June.
“Pakistan’s reform implementation under the EFF arrangement has helped preserve macroeconomic stability in the face of several recent shocks,” IMF Deputy Managing Director Nigel Clarke said in a statement after the Board meeting.
But he warned that Islamabad must “maintain prudent policies” and accelerate reforms needed for private-sector-led and sustainable growth.
The Fund noted that the 2025 monsoon floods, affecting nearly seven million people, damaging housing, livestock and key crops, and displacing more than four million, have set back the recovery. The IMF now expects GDP growth in FY26 to be slightly lower and forecasts inflation to rise to 8–10 percent in the coming months as food prices adjust.
The review warns Pakistan against relaxing monetary or fiscal discipline prematurely. It urges the State Bank to keep policy “appropriately tight,” allow exchange-rate flexibility and improve communication. Islamabad must also continue raising revenues, broadening the tax base and protecting social spending, the Fund said.
Despite the progress, Pakistan’s structural weaknesses remain severe.
Power-sector circular debt stands at about $5.7 billion, and gas-sector arrears have climbed to $11.3 billion despite tariff adjustments. Reform of state-owned enterprises has slowed, including delays in privatizing loss-making electricity distributors and Pakistan International Airlines. Key governance and anti-corruption reforms have also been pushed back.
The IMF welcomed Pakistan’s expansion of its flagship Benazir Income Support Program, which raises cash transfers for low-income families and expands coverage, saying social protection is essential as climate shocks intensify. But it warned that high public debt, about 72 percent of GDP, thin external buffers and climate exposure leave the country vulnerable if reform momentum weakens.
The Fund said Pakistan’s challenge now is to convert short-term stabilization into sustained recovery after years of economic volatility, with its ability to maintain discipline, rather than the size of external financing alone, determining the durability of its gains.
