10 Nov 2008

Pakistan investigates money-change firm

2:46 pm on 10 November 2008

Pakistan is investigating the transfer of millions of dollars in foreign currency abroad as it tackles a financial crisis.

Two directors of one of the biggest foreign exchange companies, Khanani and Kalia International, were arrested on Saturday.

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

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

The BBC reports there are also massive trade and budget deficits, plunging foreign currency reserves and capital flight.

The government in Islamabad needs to find $US5 billion this month if it is to avoid defaulting on foreign loans.

Authorities say a flood of money out of Pakistan has caused an enormous drop in the value of the currency.

At the beginning of the year the rupee was trading at 65 to the United States dollar. Last month it fell to a record low of 90 to the dollar.

Few details of the charges against the KKI pair have been issued, but investigators say they have seized a computer which they believe holds the records of illegal transfers to accounts in the Gulf, Europe and the US.