(Bloomberg) -- Pakistan is cracking down on illegal dollar trade after the rupee set a new record low this month and the stern measures are showing signs of initial success.
“The crackdown against people engaged in illegal dollar trade, smuggling is ongoing,” Information Minister Murtaza Solangi said in a mobile-phone message on Friday. Illegal trades include buying or selling dollars without any record and remittances through informal channels.
The Federal Investigation Agency is raiding offices of money changers in Karachi and arrested at least five people this week that are involved in illegal dollar transactions, according to spokesman Muhammad Alim. The government is also deploying security officials in plainclothes at money exchanges to monitor dollar sales, according to Zafar Paracha, general secretary of the Exchange Companies Association of Pakistan.
The crackdown has strengthened the rupee by almost 10% in the retail market this week. That has eased pressure on the key interbank market.
Pakistan’s rupee is the worst-performing Asian currency this quarter, losing almost 6% against the dollar, and setting a new record low in September.
Pakistan’s central bank asked leading banks this week to engage in foreign currency business that is expected to increase compliance. More measures could be coming with a central bank interest-rate hike likely in the cards next week, as some bond investors expect an increase of 200 basis points or more.
The rupee rose 0.7% to 302.7 per dollar on Friday after touching a record-low 307.25 this week, according to data compiled by Bloomberg.
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