With the entry of the Federal Investigation Agency entry into the black market for dollars, we are likely to witness a market failure evolving into a government failure. At the moment the US dollar is short in the open market but available in the black market at a relatively higher rate fuelling the speculation. Second, when the central bank has both the exchange rate and interest rate in its hands, it loses precision in the capital market. The government inspectors may enter the black market and may make headlines, but at the cost of leading the small black market into unknown spacesThird, the government devalued the currency in the hope of boosting exports which would have eventually eased down the current account imbalance. The government inspectors may enter the black market and may make headlines, but at the cost of leading the small black market into unknown spaces where it not only becomes elusive to traditional tactics but also grows in proportion.

Source: Pakistan Today April 07, 2019 20:03 UTC