Page last updated at 17:28 GMT, Monday, 10 November 2008

Pakistani currency dealers held

Munaf Kalia (centre)
Munaf Kalia is at the centre of a nationwide investigation

Two directors of a Pakistani currency company have been remanded in custody over allegations that they illegally transferred millions of dollars abroad.

The two directors of Khanani and Kalia International (KKI), one of the biggest foreign exchange companies, were arrested on Saturday.

Their company's license to trade has also been suspended for a month and its offices have been searched.

Pakistan's economy is in crisis and the IMF is preparing a rescue package.

Inflation is running at 25%, and there has been a collapse in the value of its stock market and currency.

There are also massive trade and budget deficits, plunging foreign currency reserves and capital flight.

Money changer in Pakistan
Pakistan's foreign exchange reserves have dropped

The government in Islamabad needs to find $5bn this month if it is to avoid defaulting on foreign loans.

Officials say that the activities of Munaf Kalia and Javed Khanani - arrested in Karachi and Lahore respectively - may have contributed to a big reduction of the country's foreign exchange reserves, which have depleted from over $16bn in October 2007 to below $7bn today.

The authorities say the flood of money out of the country has also caused an enormous drop in the value of the rupee. At the beginning of the year it was trading at 65 to the dollar. Last month it fell to a record low of 90 to the dollar.

Few details of the charges against the KKI duo have been released. Investigators have seized a computer which they say may have details of transfers to accounts in the Gulf, Europe and the US.



Print Sponsor


RELATED INTERNET LINKS
The BBC is not responsible for the content of external internet sites


FEATURES, VIEWS, ANALYSIS
Has China's housing bubble burst?
How the world's oldest clove tree defied an empire
Why Royal Ballet principal Sergei Polunin quit

BBC iD

Sign in

BBC navigation

Copyright © 2020 BBC. The BBC is not responsible for the content of external sites. Read more.

This page is best viewed in an up-to-date web browser with style sheets (CSS) enabled. While you will be able to view the content of this page in your current browser, you will not be able to get the full visual experience. Please consider upgrading your browser software or enabling style sheets (CSS) if you are able to do so.

Americas Africa Europe Middle East South Asia Asia Pacific