Pakistan’s Inter-Services Intelligence (ISI) agency has initiated a crackdown on illegal dollar trading to address the rapid decline of the Pakistani rupee, according to the head of the country’s forex association. On July 24, 2025, a senior ISI official met with currency exchange firms to discuss measures to stabilize the currency, leading to swift enforcement actions against unregulated dealers. The intervention resulted in a one-rupee recovery in the open market rate against the dollar, with improved dollar supply reported in formal channels.
The rupee has faced significant pressure due to dollar hoarding, cross-border smuggling, and banking restrictions driving demand to the black market. This marks the second major intervention by the military since 2023, when similar actions helped stabilize the currency temporarily. The ongoing economic strain is exacerbated by Pakistan’s efforts to maintain foreign exchange reserves under a $7 billion IMF program, which requires keeping the gap between interbank and open market rates within 1.25%. Despite the crackdown, some upscale areas in Karachi report persistent dollar shortages, with grey market rates remaining about 5% above interbank levels.
The Federal Investigation Agency has joined efforts to target illegal traders, many of whom have gone underground. The move reflects the military’s growing role in managing Pakistan’s economic challenges, amid concerns over remittances shifting to informal channels. Southasiandesk.com will continue to follow developments in this economic stabilization effort.
Published in SouthAsianDesk, July 25th, 2025
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