Pakistan is planning to revise its currency swap agreement with China and wishes to make it more practical and easy to use. However, there is no consideration on the increasing the same for Iran. This was stated by Governor State Bank of Pakistan (SBP), Tariq Bajwa, while talking with ProPakistani.
Tariq Bajwa told that the currency swap agreement with China is active and Government-to-Government level and some commercial transactions are also held but there are some issues which need to be resolved.
“SBP suggested some changes in China-Pakistan currency swap agreement. Our suggestions will make this agreement more practical and implementable. Right now, we are waiting China’s central bank’s response on the recommendations.” the governor added.
On the other currency swap agreements, Tariq Bajwa said that currency swap agreement with Turkey only exists on paper and it was not implemented due to lack of intrust of Turkish Government. Pakistan is in contact with Turkish authorities to implement the agreement. Currency swap with Iran is not under consideration, he added.
“For trade facilitation, Pakistan and Iran draw an alternative mechanism. In this mechanism, commercial banks have to come forward and lead this but commercial banks are not coming forward,” Bajwa said.
Pakistan Forex Association Chairman Malik Bostan informed that Chinese companies working in Pakistan are disbursing salaries in RMB (Chinese currency). And that they are bringing this money to exchange companies in big numbers. According to him, Pakistan is building up sufficient stocks of RMB.
On the issue of currency swap agreement with China and its lack of effectiveness in fulfilling the demands of common importers, the importers blamed banks as they do not allow open Letter of Credit, said Haroon Agar and importer from China.
“I discussed this issue with many bankers but they say that in currency swap we need to convert currency twice and this will make import and export more expensive. “ Haroon Agar told ProPakistani.