Fact-Check: Will Pakistan shut down all foreign exchange companies?
Pakistan’s central bank is not closing down foreign exchange traders. However, the capital for such companies to operate has been hiked
Updated Tuesday Sep 26 2023
Online posts shared over tens of thousands of times allege that Pakistan will be shutting down all foreign exchange companies to help the country’s ailing currency.
The claim is misleading and omits important context.
Claim
“It has been decided to end the currency exchange market [in Pakistan],” wrote a user on X, on September 7. The user added that from now on all foreign currency dealings will only take place through commercial banks.
“Time to end the currency mafia,” the user further posted.
This post has been viewed over 72,000 times on X, formerly known as Twitter, and reposted over 500 times and liked nearly 3,000 times.
The identical text was also posted by another account on X.
This post too had been shared over 100 times and liked over 500 times, at the time of writing.
Separately, a similar claim took off on Facebook.
Fact
The claim is misleading.
Pakistan’s central bank is not shutting down foreign exchange traders. However, the capital for such private companies to function has been hiked considerably, which could lead to a decrease in the number of companies operating in the market in the coming months.
Abid Qamar, the spokesperson of the State Bank of Pakistan (SBP), said it was “wrong” to say that exchange companies will be closed.
“The exchange company market will exist,” he told Geo Fact Check over the phone but added that the required capital has been raised. Qamar further said that the SBP is also encouraging banks to open their own foreign exchange companies.
“Now, in the future, a person will have access to two kinds of exchange companies,” he explained, “Some opened by banks and some by individuals or a group.”
A statement posted on SBP’s website on September 6 also notes that the State Bank has decided to introduce structural reforms in the exchange sector.
“As part of these reforms, leading banks actively engaged in foreign exchange business will establish wholly owned exchange companies to cater to the legitimate foreign exchange needs of the general public,” it reads.
Further adding that the minimum capital for an exchange company to operate has been increased from Rs200 million to Rs500 million.
Malik Bostan, the chairman of the Exchange Companies Association of Pakistan, also confirmed that there was no plan to shutter all foreign exchange dealers in the country.
“No, they are not being closed,” he told Geo Fact Check over the phone, “I spoke to the State Bank and other senior officials about this.” Bostan added that the capital for operating an exchange company has indeed been hiked.
“These companies will not close down, they will however merge with other companies,” he explained.
With additional reporting by Nadia Khalid.
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