At least $7 million is being smuggled out of country while several banks have made a cartel and are responsible for sudden jump in dollar value, banking sector experts told the Nation.

They said that country had been receiving around $12 million per day as compared to present arrival of $6-7 million daily, showing a greenback smuggling of about $6-7 everyday.They urged the State Bank to monitor some banks which have made a cartel and are responsible for the abrupt increase in the dollar price. They, however predicted that any further cut in interest rate would also boost dollar demand and its value, terming the decision of interest rate cut damaging for local currency.

On queries of government possible intervention to stable the local currency, experts observed that it is the responsibility of the central bank to keep vigil on money matters in the country, maintaining the value of its currency. Citing an example, they said the Swiss Bank has lowered its currency value by 8 per cent despite the fact that its currency demand is so high. The decision was made by the Bank to support its export, they added.

Director International Hardware and House-ware Association and FPCCI Executive Committee Member Sardar Usman Ghani has urged the Chief Justice of Pakistan to take suo motto notice of an unprecedented surge in dollar price that has gone up by more than five rupees in just 30 days period.Usman Ghani said that the unusual increase in dollar price has not only eaten up the profit margin but is also incurring a huge loss on local businesses.

He said that a committee should also be formed to identify the reasons and fix the responsibility as speculations are rife that the dollar would touch Rs 110 in matter of days.He said that the local industry consumes a big chunk of imported raw materials therefore it has become very difficult for local businessmen to continue with their businesses.

He said that what about the commercial importers who had already sold their merchandise on advance sale. He feared that these businesses would definitely turn bankrupt.He said that on the one hand the cost of doing business would go up while on the other purchasing power of the masses would decrease that would give credence to inflation.

Tariq Jamil, a financial expert and former SVP HBL observed that some support came from remittances, which was the only hope to stable the rupee, otherwise the currency would have fallen further, he maintained. He said that reason turning Current Account Deficit  from green to red during 5MFY13 can be attributed to massive decline in remittances in Nov 2012 that did not prove a friend in need, dropping 25% MoM, as the trade deficit, with lion’s share in the current account, could not be funded enough with TAD even down 1% MoM.

Though still averaging over $1.2 billion with decent rise of 10% YoY, drop in remittances could be associated to high receipt-Eid season a month earlier while the flow is again expected to pick up in coming months with rupee depreciation to capitalize on. Additionally, higher income deficit in Nov 2012, up 42% MoM, on account of higher interest payments also took toll on the current account.