State Bank of Pakistan (SBP) Governor Jameel Ahmad Monday said that the inquiry against banks over their alleged role in exchange rate manipulation has been completed.
The central bank governor made these comments during the question-and-answer session after the Monetary Policy Committee (MPC) meeting of the SBP.
Highlighting that 13 banks were inspected over the issue, the governor said that the banks found involved in exchange rate manipulation would either face regulator action or fiscal action. He said if fiscal action is taken, taxation measures can be imposed.
The governor further said that the action will either be taken by the central bank or the government, depending upon the final decision on the type of penalties. He clarified that both regulator and fiscal actions cannot be taken at the same time.
He pointed out that the exchange rate manipulation was observed during the first nine months of 2022, but mostly during the two months of June and July. Adding that no manipulation happened after September. During the period i.e. January to September 2022, the banks made a gross income of around Rs. 100 billion, he added.
Speaking about the multiple exchange rates, the governor highlighted that due to the high current account deficit and delay in foreign inflows, there is a speculative element that had led to multiple exchange rates.
He expressed hope that with the revival of International Monetary Fund (IMF) program which is expected soon, the spread between interbank and open market rates will reduce and the speculation element would also reduce.
It is pertinent to mention here that the governor had informed the National Assembly’s Standing Committee on Finance and Revenue in October last year that investigation has been launched regarding the role of banks in exchange rate manipulation.