Pakistan says it is investigating the alleged illegal transfer of millions of dollars in foreign currency abroad, as it tackles the financial crisis. The two directors of Khanani and Kalia International (KKI), one of the biggest foreign exchange companies, were arrested on Saturday. 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. The government in Islamabad needs to find $5bn this month if it is to avoid defaulting on foreign loans. The authorities say the flood of money out of the country has caused the enormous drop in 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, 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. A spokesman for Pakistan's money-changers has denied that their firms are responsible - and said that the government's investigation into their activities will cause a further slide in the rupee's value.