Exchange Companies (ECs) are now permitted to sell 20 percent of remittances sent by overseas Pakistanis to their customers in order to curb the US Dollar shortfall in the country.
This was decided at a meeting with exchange company heads held Thursday at the State Bank of Pakistan (SBP) headquarters. The meeting was presided over by State Bank Governor Jameel Ahmed and other SBP officials also attended to discuss various currency market issues, reported Business Recorder.
During the meeting, SBP instructed exchange companies to strictly follow regulatory guidelines or risk being prosecuted.
SBP Governor Jameel Ahmed stated that the Bank’s vigilance teams will conduct surprise visits to exchange companies to inspect operational procedures. He instructed ECs not to conduct any transactions that did not include receipt and biometric verification. For security and compliance-related aspects, ECs have to ensure that the CCTV system is operational during trading hours, he added.
The top central bank official allowed traders to sell 20 percent of their inward workers’ remittances to customers, while the remaining 80 percent will be surrendered in the interbank market. Pertinently, the central bank previously required currency dealers to surrender 100 percent of workers’ remittances in the inter-bank market, leaving nearly nothing for dealers to sell to individual customers.
During the meeting, Chairman Exchange Companies Association of Pakistan (ECAP) Malik Bostan informed that the Afghan government had recently instructed for PKR to be converted into any foreign currency or local currency immediately and that as a result of this announcement, Afghani traders and the general public are converting Pakistani rupees into foreign currency on a large scale.
The currency export asked the Government of Pakistan to reconsider its trade policy with Afghanistan, as approximately $2 billion is being sent there through official and unofficial trade, putting a strain on Pakistan’s forex reserves. The federal government should initiate barter trade and establish Letters of Credit in local currency immediately. Simultaneously, all cash dollar trade with Afghanistan should be prohibited, he added.
