According to central bank (SBP) governor Jameel Ahmad, action will be done on Dollar manipulation by either the SBP or the government, but not both.
After the Monetary Policy Committee (MPC) meeting of the SBP on Monday, Governor Jameel Ahmad of the SBP stated, “The SBP has inspected 13 banks and found the flaws.” Prior to this, Ahmad had stated that the MPC has decided to raise the benchmark interest rate by 100 basis points, bringing it to 17%.
The only remaining question is what will be done about banks’ foreign exchange profits, according to Ahmad implying that the SBP had indeed found the banks guilty of exchange-rate manipulation.
“One is the regulatory side action — the other is fiscal action, which includes taxation-related measures.
“This is the issue, which has led to the delay. However, action would be taken either by the SBP or the government. However, both actions cannot be taken at the same time. This leads to legal complications
“We just do not want to pursue the route of double action,” he said.
The SBP chairman also stated that January through September 2022, “particularly June and July,” was the time frame the central bank concentrated on for the examination.
He said that “the problem of currency volatility was eliminated in the fourth quarter.
According to Ahmad, banks made Rs 100 billion in gross income in the first three months of 2022.
SBP’s investigation
The SBP is looking into the extraordinary fluctuations of the Pakistani rupee in 2022, which saw record lows versus the US dollar in September before abruptly rebounding at the month’s conclusion. This led officials to suspect bank and exchange company manipulation.
Abid Qamar, the main spokesperson for SBP, had hinted that results would be forthcoming shortly in October but had resisted providing a precise completion date. But he added that the investigation had begun earlier, when Dr. Miftah Ismail was the previous finance minister.
Ahmad had claimed in November that the central bank had expanded the scope of its probe beyond eight institutions, with the inspection team’s target for completion being the end of the month. Ahmad declined to name the banks but made it clear that the investigation’s focus had changed following initial review.