It all started with a flurry of text messages warning people that the government was considering sealing personal lockers and freezing foreign currency accounts that Pakistanis can maintain in banks alongside their rupee accounts.
It brought back memories for many of the 70’s when the then Prime Minister Zulfikar Ali Bhutto had threatened to nationalise lockers in a bid to recover what he claimed was wealth stolen from the people.
He never did so, but the memories of that troubling period for many came back. People also remember the freezing of foreign currency accounts after the May 1998 nuclear blasts in Pakistan.
The move was later regretted by the then Prime Minister Nawaz Sharif as a mistake. But people have not forgotten.
So, when there was talk of these things happening again, hundreds of people thronged local branches and begums and businessmen alike emptied their lockers and foreign currency bank accounts. If that was not enough, there was massive buying of gold and dollars that pushed up the rate of both.
The dollar appreciated in a week from Rs 73 to Rs 80. Gold prices also rose. Amidst talk of doom and gloom, rumours started of two major banks going bankrupt.
These were strongly denied and the chairman of one of the banks had to fly in from Dubai to explain that his bank was up and running.
For bankers and businessmen, it was a busy week in Pakistan. The State Bank (akin to India’s Reserve Bank) was in a quandary. If it acted on rumours, there were fears that this would create more panic.
Finally, after the gossip of the bank failures got out of hand, it did clarify that both banks that were mentioned were doing well. In another coincidence, bankers say that the rumours originated from the Karachi Stock Exchange where brokers are pushing for a government rescue plan.
The government has so far been shy of rescuing the brokers only, saying that any plan that it makes will be focused on the investors and not the brokers.
Within a week, thanks to a whispering campaign, Pakistan’s economy received a major jolt. It is a telling sign of the times.