Volatile times

Following the recent volatility in the rupee/dollar rate, where it shot up to Rs146 in the open market, the prime minister made a wrong move. It does not behove the country’s chief executive to intervene directly, by calling a meeting of exchange firms/money changers and beseeching them to maintain stability in the exchange rate. He also discussed measures that would help keep the dollar demand under control. The matter clearly falls within the ambit of the State Bank to take notice of and ask exchange firms/money changers to cool the demand. But the State Bank now seems inconsequential, after the IMF has moved in.Interestingly, the volatility in the exchange rate is created by none other than the exchange firms/money changers themselves. They are responsible for the illegal flight of capital through hawala/hundi, causing increased dollar demand. To control the dollar demand, money laundering should be curbed. That can be effectively done if exchange firms/money changers are outlawed and banned. The genuine foreign exchange requirement for travel, medical treatment, education fees etc can be catered for by the commercial banks as used to be the case till the 1980s.Arshad M KhawajaKarachi

from The News International - Newspost http://bit.ly/2YwGuhh