Shabbar Zaidi, the ex-chairman of the Federal Board of Revenue (FBR), has shared an interesting insight. He believes that if the government successfully manages the issues related to Afghan transit trade, the US dollar could fall significantly, possibly to 250 rupees.
According to Zaidi, Afghan transit trade plays a big role in Pakistan’s imports, worth around $6 billion. If this impact can be reduced, the Pakistani rupee might get stronger compared to the US dollar.
Zaidi explains that Afghanistan doesn’t have enough of its own foreign exchange reserves. They depend on Pakistan and a system called ‘hawala’ to finance their imports with US dollars. He also mentions that recent actions against currency smuggling and Afghan transit trade are connected.
Zaidi appreciates the government’s recent moves to control Afghan trade. They’ve released a list of items that Afghanistan can’t import through Pakistani sea and border ports, according to the Pakistan-Afghanistan Transit Trade Agreement. The FBR (Federal Board of Revenue) has also added a 10 percent processing fee on specific categories of Afghan transit commercial goods, such as confectionaries, footwear, machinery, blankets, and garments. Additionally, the FBR will take bank guarantees for all Afghan transit goods equal to the total duties and taxes on the goods going to Afghanistan through Pakistan.
Zaidi believes that effectively managing Afghan transit trade could solve about 20 percent of Pakistan’s economic problems.
It’s important to note that after the recent efforts to stop currency smuggling and illegal activities, the Pakistani rupee has become the best-performing currency in the world in September. It gained over 6 percent against the US dollar, and the open market rate for the dollar dropped by as much as 50 rupees in September.
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