KARACHI/PESHAWAR, July 29 (Reuters): Crackdown Pushes Pakistan’s Underground Dollar Trade Online as Rupee Strengthens. Pakistan’s recent enforcement campaign against informal dollar trading has led to a modest rebound in the rupee. However, currency dealers report that illicit transactions have quickly shifted to encrypted messaging apps, home delivery networks, and digital peer-to-peer channels.ReutersArab News
Black Market Dealers Shut Out of Streets, Move Online
Since July 22, Pakistani authorities—including a military intelligence agency and the Federal Investigation Agency (FIA)—have shuttered numerous unlicensed exchange shops following meetings with sector representatives over the rupee’s slide.Reuters+14Reuters+14Arab News+14
Temporary Rupee Recovery Isn’t Lasting
The crackdown initially helped the rupee recover, from approximately ₹288.6 per USD on July 19 to around ₹286 during recent sessions. However, traders warn the effect may be short-lived as unofficial dealings continue via new digital channels.TradingView+4Reuters+4Arab News+4
Peshawar’s Famous Chowk Yadgar Market Shutters, Activity Goes Underground
In Peshawar—long known as a hub for informal forex activity—shops in the Chowk Yadgar district have closed. Still, back-alley booths and private networks persist. Veteran dealer Ahmad—speaking anonymously—stated: “The trade didn’t stop. It just moved. Now it’s on WhatsApp… if you know someone, the dollars come to your house.”Reuters+5Reuters+5Arab News+5
Retail Traders Turning to Informal Digital Networks
Even corporate buyers are bypassing licensed channels. Hassan, a Karachi-based firm manager, said stricter documentation pushed him to join a peer-to-peer FX chat where buyers and sellers transact without middlemen or fees—sometimes via cash, bank transfers, or even cryptocurrency.Profit by Pakistan Today+4Reuters+4TradingView+4
Central Bank Orders Tightened to Safeguard the Rupee
On Monday, Pakistan’s central bank summoned treasury heads from commercial banks and warned against purchasing dollars from exchange shops at above-official rates, citing market distortion. Banks were directed to rely solely on export earnings and remittance inflows—both of which have recently slowed.Profit by Pakistan Today+4Reuters+4Arab News+4
Authorities also mandated maintaining a narrow gap between interbank and open-market exchange rates, in line with conditions linked to Pakistan’s $7 billion IMF programme.Reuters+8Reuters+8Profit by Pakistan Today+8
Rate Cut Ahead: Boon or Currency Risk?
With a policy rate cut expected shortly (e.g., possibly on July 30), inflation may ease—but the rupee could come under renewed pressure if fresh forex inflows don’t materialize.Reuters+1Profit by Pakistan Today+1
Summary
While enforcement actions have temporarily supported the rupee, the spirit of the black market lives on through decentralized digital channels. Digital survival strategies such as encrypted messaging and peer-to-peer trading have outpaced street-level crackdowns. Stability hinges on stronger export flows, remittance inflows, and tighter coordination between monetary policy and market regulation.
