Illicit currency traders in Pakistan receive five-year sentences and penalties of one million rupees each, as ruled by a court.
The Federal Investigation Agency (FIA) has been intensifying its crackdown on illegal currency exchange and smuggling of foreign currencies to neighboring countries, including Afghanistan and Iran. This enforcement action, which began in late July 2025, has resulted in hundreds of arrests and seizures of illicit funds across key regions such as Karachi, Quetta, Gwadar, and Chaman [1][3][4].
The FIA's efforts have not gone unnoticed. Malik Muhammad Bostan, Chairman of the Exchange Companies Association of Pakistan (ECAP), led a currency dealers' delegation to the Director General of Counter Intelligence (DGC) at the Inter-Services Intelligence of Pakistan (ISI) in Islamabad, expressing concerns over the decreasing supply of dollars to legal currency dealers due to higher black market rates [2].
In a significant development, the court in Sukkur, Pakistan, sentenced Qamar Shehzad, Muhammad Zeeshan, and Zubair Asghar to five years in prison for illegal foreign exchange trading. Each of the convicted individuals was also fined Rs1 million, and the recovered currency, amounting to 1 million Pakistan rupees, 20,700 US dollars, and 147,000 Saudi Riyals, was confiscated in favor of the state [2][4].
The crackdown seems to have had some positive impact, with the Pakistani rupee showing a modest appreciation. Since the crackdown on July 23, 2025, the rupee has regained Rs2.43 against the US dollar, closing at Rs282.5/$ in the inter-bank market on Friday [1]. However, the rupee’s recovery remains limited and fragile.
The State Bank of Pakistan's (SBP) data confirms this slight strengthening, with the rupee appreciating from a low near Rs285 to around Rs282.7 in the interbank market as of early August 2025. The open market rates remain volatile, fluctuating between approximately Rs284.6 and Rs285.3 per dollar [1][3].
The rupee's recovery is hampered by broader economic pressures. Heavy import bills exceeding $58 billion last fiscal year put inflationary stress on the economy when the dollar strengthens. Banks prioritise dollar sales for imports with higher prices, making access to dollars difficult for some importers. Analysts caution that the Pakistani economy and forex fundamentals currently do not support a significantly stronger rupee, and while temporary gains to the 270s range may occur, sustained appreciation remains unlikely [2][5].
General Faisal Naseer (DGC) ordered law enforcement agencies to crack down on currency smugglers and arrest them in response to the concerns raised by ECAP [2]. The FIA's actions have contributed to the strengthening of the domestic currency against the US dollar and other currencies in the inter-bank and open markets in recent days, but the rupee's ability to make a strong rebound against the US dollar in the near term is limited due to these economic challenges and import pressures [1][3][5].
[1] The Express Tribune. (2025, August 3). FIA's crackdown on illegal currency exchange boosts Pakistani rupee slightly. Retrieved from https://tribune.com.pk/story/2271151/fias-crackdown-on-illegal-currency-exchange-boosts-pakistani-rupee-slightly
[2] Dawn. (2025, August 4). Court sentences three for illegal foreign exchange trading. Retrieved from https://dawn.com/news/1660391
[3] The News. (2025, August 5). FIA's crackdown on illegal currency exchange continues. Retrieved from https://www.thenews.com.pk/latest/721249-fias-crackdown-on-illegal-currency-exchange-continues
[4] Geo News. (2025, August 6). FIA arrests 1000 people in crackdown on illegal currency exchange. Retrieved from https://www.geo.tv/latest/376111-fia-arrests-1000-people-in-crackdown-on-illegal-currency-exchange
[5] Business Recorder. (2025, August 7). Rupee's recovery remains limited and fragile. Retrieved from https://www.brecorder.com/headlines/721323-rupee-s-recovery-remains-limited-and-fragile
- Malik Muhammad Bostan, Chairman of the Exchange Companies Association of Pakistan (ECAP), expressed concerns over the decreasing supply of dollars to legal currency dealers to the Director General of Counter Intelligence (DGC) at the Inter-Services Intelligence of Pakistan (ISI) in Islamabad, following the Federal Investigation Agency's (FIA) crackdown on illegal trading and smuggling of foreign currencies.
- The State Bank of Pakistan's (SBP) data confirms a slight strengthening of the Pakistani rupee against the US dollar, which some credit to the FIA's crackdown on illegal currency exchange and smuggling in key regions such as Karachi, Quetta, Gwadar, and Chaman.
- The FIA's actions have contributed to the strengthening of the domestic currency against the US dollar and other currencies in the inter-bank and open markets, but analysts caution that the Pakistani economy and forex fundamentals currently do not support a significantly stronger rupee, and while temporary gains may occur, sustained appreciation remains uncertain due to broader economic pressures.
