KARACHI: The Reserve Bank of India’s reported permission to Indian Banks to purchase [the] Pakistan rupee in the open market after the Pakistan State Bank’s directive to Scheduled Banks enjoining the observance of Pakistan’s rate of exchange in monetary transactions is considered in informed commercial circles in [the city] as “veiled and indirect acceptance of the exchange rate of [the] Pakistan rupee by India”.

The “unlimited freedom” in monetary transactions with Pakistan afforded to Indian banks by the Reserve Bank … is circumscribed, these circles point, by the … State Bank’s restriction that [the] Pakistan rupee’s exchange rate should be maintained in all transactions. All Indo-Pakistan money … transaction[s] would have to be on the inviolable rate of exchange of the Pakistan rupee, these circles maintain.

While there is slight difference of view on the advisability or otherwise of the State Bank’s recent step, competent observers in Karachi on Saturday [Nov 19] unanimously believed that the “actual war of the rupees” had now been launched and it was going to be [a] “tough fight,” they said.

Published in Dawn, November 20th, 2024