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Friday, 18 April 2008

The UAE dirham is in higher demand than the US dollar in the local market, which has boosted the “Hundi” business in the country once again, report agencies.

The reason for flourishing Hundi business and high demand of dirham is the slump in the real estate in Pakistan and the boom in property business in Dubai.

“The dollar is not paying more these days as the greenback has become unpredictable in Pakistan,” said Kamal Saeed, a currency dealer. “We see all major currencies gaining against the dollar but the situation is reverse in our country,” he added.

He said the dirham business was paying much more than the dollar. However, most of the dirham is being paid through Hundi business. Investors used to pay in rupee in Pakistani and receive dirham in Dubai.

“The State Bank has strict laws for investing abroad, especially it is very difficult for an individual to stratify the demand of the State Bank,” said M. Munazir, a real estate dealer in Karachi.

He said the real estate business had been facing slump for more than six months and the situation had yet not improved despite a vital change came through the general elections. “The real estate prices have declined but more significant factor is that very few transactions are taking place.

This discourages the local investors, while Dubai attracts them to add to its wealth,” said Mr Munazir. No currency dealer accepts that the money is being transferred through Hundi system but the investors know the addresses of currency dealers, who indulge in such money transaction.

After the incident of 9/11 in 2001, strict laws and harsh monitoring by US as well as Pakistan made it almost impossible to carry on the Hundi business.

The impact clearly helped Pakistan when the remittances of overseas Pakistani workers started flowing into the country through banking channels, which multiplied the volume of inflows reaching a record $5.5 billion in 2006-07.

With the passage of time the monitoring by the US relaxed and the non-involvement of any Pakistani bank in money laundering also made the harsh check on Pakistan relatively soft. Currency dealers said Hundi business never stopped rather it slowed down and changed its direction.

It is now mostly limited to this region and especially to the Middle East, Pakistan, India and Bangladesh. Real estate dealers said Pakistanis had been investing in Dubai with the help of Hundi system as transaction through banking channel is almost impossible.

They said for companies transfer of money was possible as a company is in a position to provide all documents to be demanded by the authorities.

“The demand for dirham is so high these days in the local market that I wonder what is going on in Dubai,” said a currency dealer attached with a large Pakistani bank.

Dubai, being commercial hub of the region, is attracting investment from all over the world but Pakistanis are eager to invest in real estate, software production, trade and small hotels and restaurants.

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