Exchange Companies Can Attract $10 Billion Remittances Per Year

Exchange companies have formally requested the State Bank of Pakistan (SBP) to prohibit banks from forward-booking of US Dollars (USD) for import purposes to stabilize the rupee-dollar parity.

In a meeting with the Finance Minister, Shaukat Tarin, and the Governor SBP, Dr. Reza Baqir, the Chairman of the Exchange Companies Association of Pakistan (ECAP), Malik Bostan, asked that commercial banks should be stopped from forward-booking of US Dollars (USD). He also demanded that banks must not sell dollars to importers more than they [banks] buy from exporters. “Only this way, a balance could be achieved,” he said.

If the federal government announces incentives for exchange companies, the exchange firms have the ability to attract $10 billion in remittances every year, he remarked.

Bostan stated that the ECAP advocated trading with Afghanistan in the Pakistani Rupee because importers from the neighboring nation are buying the greenback on the Pakistani market to pay for products from Pakistan.

At the meeting, the ECAP Chairman also requested the export of old design dollars, claiming that the populace has enormous sums of money in their homes and bank lockers. “The SBP must allow exchange companies to export old dollars on a daily basis like other third foreign currencies, Exchange Companies will deposit these dollars in bank accounts,” he said.

He stated that these dollars were issued prior to 2013, and commercial banks are no longer buying these old notes from the public. He went on to say that this will assist attract more foreign exchange into the market.

During the meeting, the Finance Minister and the Governor of the SBP pledged to settle all exchange company issues on a first-come, first-served basis. Bostan indicated that during the meeting, Finance Minister Shaukat Tarin guaranteed that exchange companies will be given a discount for receiving inward remittances in the same proportion as commercial banks. It is pertinent to note that currently, banks receive Rs. 6 per dollar on remittances.

It was also agreed to provide exchange firms with a discount in exchange for drawing remittances from overseas Pakistanis to improve foreign currency availability through legitimate channels.