Tag: Government Initiative

  • Pakistan to launch digital rupee to reduce printing and distribution costs

    Pakistan to launch digital rupee to reduce printing and distribution costs

    The government has opted to introduce a digital currency as a strategic move aimed at reducing expenses associated with currency printing and distribution.

    According to The News, this digital currency initiative is expected to contribute to the appreciation of the rupee’s value, bolster the overall economy, and facilitate extensive financial transactions.

    Much like the Chinese digital currency, where one unit is equivalent to one Chinese Yuan, the value of this digital currency will be pegged to the Pakistani rupee. The State Bank of Pakistan (SBP) will be the driving force behind this endeavour, offering government-backed guarantees similar to traditional currency notes. The SBP has already begun its efforts, enlisting the expertise of professionals for its development.

    To oversee this transformation, a specialised department known as the Central Bank Digital Currency has been established. This department is diligently assessing the cost benefits and feasibility of the digital currency to ensure seamless transactions upon its launch.

    The government’s objective is to gradually replace physical currency notes with digital currency while maintaining an 80:20 ratio, allowing currency notes to coexist as a backup in unforeseen circumstances.

    The adoption of digital currency will also yield significant savings by eliminating the expenses associated with printing, distributing, and disposing of physical notes. Additionally, every digital transaction will be meticulously documented, enhancing the effectiveness of monetary policy enforcement.

    Furthermore, digital currency holds substantial potential for advancing cross-border trade and investment and extending access to financial services for the unbanked population. The World Bank acknowledges its potential to enhance the financial industry’s efficiency, resilience, and reliability, with blockchain technology serving as one of the pivotal distributed ledger technologies supporting these advancements.

  • Open market: PKR gains Rs30 against US dollar in just four days

    Open market: PKR gains Rs30 against US dollar in just four days

    The Pakistani rupee (PKR) has shown remarkable strength, appreciating by 4 rupees against the US dollar (USD) in the open market, with current quotes at 301/305 around noon. In just four days, the PKR gained an impressive 30 rupees (9.97 per cent), moving from PKR 331 to PKR 301 against the USD.

    Simultaneously, in the interbank market, PKR appreciated by 2 rupees in today’s session, quoted at 302.74/302.84, following a similar gain in the previous interbank session, reducing the gap between the interbank and open market to 0.57 per cent.

    This surge in the local currency is attributed to reforms by the State Bank of Pakistan (SBP) in the exchange companies sector. These reforms aim to consolidate exchange companies into a single category with a well-defined mandate and higher capital requirements, also encouraging banks to establish wholly owned exchange companies.

    An ongoing crackdown against speculators, hoarders, and smugglers has further boosted sentiment, reducing the disparity between the open market and interbank rates below the IMF’s recommended threshold.

    The black market for Hawala/Hundi has also seen a significant decline in dollar rates. Previously, rising demand for dollars due to speculation and smuggling had widened the gap between open market and interbank rates, exceeding IMF recommendations.

    The government’s initiatives effectively curb speculative activities in the open market without interbank intervention. Further improvements are expected if similar measures are taken against gold smuggling, as individuals may opt for smuggled gold investments in the absence of dollar access.