Dollar outflow

THERE has been a consistent, significant outflow of dollars from Pakistan to Afghanistan ever since the US froze the war-ravaged country’s reserves following the Taliban takeover in summer last year. Until then, Afghanistan had been a notable exporter of dollars — poured into its economy by the US — to Pakistan for years. Thus, the reversal of Afghan fortunes has had a considerable impact on Pakistan’s weakening external sector, as stressed by the Exchange Companies Association of Pakistan on Monday. The association has said that the large-scale, illegal outflow of the greenback to Afghanistan, along with other much-discussed factors such as the trade and current account deficits and diminishing multilateral and bilateral inflows, has eroded Pakistan’s foreign currency reserves. The unhindered flow of the American currency to Afghanistan has created a crisis for Pakistan, the association officials said at a presser. According to them, in addition to US sanctions on the Taliban regime, Kabul’s directions to its citizens to convert their large Pakistani rupee holdings into dollars or other foreign currencies had ramped up the greenback’s flow towards Afghanistan in recent months. According to Ecap, Afghans were no longer allowed to keep more than half a million worth of Pakistani currency, and any person found in violation of this order would be tried under the anti-money laundering laws.