KARACHI: Pakistan’s bullion market on Tuesday hit an unprecedented seven-year high, triggered mainly by rumors on social media that the central bank was planning to discontinue circulation of the Rs5,000 currency notes and issue ones with new designs.
“For the last couple of days, the news about a change in currency notes, discontinuation of the Rs5,000 currency notes, and withdrawal of the national saving prize bonds of Rs40,000 denomination was circulating on social media, including Facebook, igniting a buying spree at the bullion market,” Haji Haroon Chand, president of the Sindh Jewelers’ Association, said.
According to Chand, “the price of gold increased by Rs2,000 ($16.32) per 11.66 gram as customers turned to it as a substitute for savings”. “Such price movement was witnessed back in 2011 when gold rates saw a hike of Rs18,00 following a bullish market,” he added.
Though no official figures have been made available yet, it is believed that a large percentage of Pakistanis opt to save in the form of cash, gold or prize bonds.
“A few years ago, a trader from Quetta came to me and wanted to exchange old currency notes of Rs500 [denomination] with newly-designed ones. When I asked him how many notes he wanted to change, his response astounded me as it was for the amount of Rs 10 billion,” Atiq Mir, Chairman of Karachi Tajir Ittehad ‑‑ an umbrella of 100 trade associations – said, when asked about the impact of fake currency news.
As rumors started gaining ground on social media, the State Bank of Pakistan (SBP) issued a statement on Tuesday, advising people to exercise caution and “pay no heed to such rumor-mongering which is aimed at creating unnecessary hype and anxiety in the general public”.
“The SBP categorically and vehemently denies all such news items. There is no plan whatsoever to issue new design banknotes in the near future. The SBP Board has not submitted any recommendation in this respect, to the federal government or the cabinet,” the statement read.
The action of the central bank seems to have pacified investors with the bullion market witnessing a Rs1,000 correction on Wednesday.
“In the short term, the capital market reacts to rumors spread through various mediums, including social media. However, in the long term the fundamentals play a decisive role,” Ahsan Mehanti, a senior stock analyst and Chief Executive of Arif Habib Group, said.
Investors continued to remain on edge on Thursday following Finance Minister Asad Umar’s address to the senate on Tuesday that the government had yet to take a decision on seeking the IMF’s help for a bailout package.
“The negative perception created in the market is that the government will not go to the IMF due to which the investors are worried about the economic future of the country. The share prices oscillate according to the prevailing sentiments,” Mehanti said.
With no mechanism in place to check the flow of fake news, the country’s business community cotinues to remain vulnerable to rumor-mongering. “The increasing use of social media is giving impetus to fake news. The impact of such news is sometimes so sudden that traders cannot wait to verify the authenticity of the news and immediately make decisions, whether good or bad,” Atiq Mir said.
Social media analysts concede that there is no way of verifying fake news but precautionary measures can help minimize impact. “Journalists can play an effective role by checking facts. Sometimes they do not bother to verify the news on social media. The void is filled by rumor-mongers,” Shaharyar Populzai, a journalist and social media analyst, said.
Facebook recently announced measures to curb the flow of fake news weeding out fake accounts considered a major source of misleading content. “We block millions of fake accounts every day, and we continuously build and update our technical systems to make it easier to respond to reports of abuse, detect and remove spam, identify and eliminate fake accounts, and prevent accounts from being compromised. In Q1 of this year, we removed nearly six million fake accounts globally,” a statement released by the social networking group read.
