Banks are turning away customers with import transactions due to a shortage of foreign exchange in the interbank, informed sources told Profit on Monday.
This news comes just days after Profit reported exclusively that the interbank market was running out of dollars.
As per informed sources, banks are being told not to give quotes for import transactions by the State Bank of Pakistan (SBP). Sources say only those banks that are receiving inflows from remittances or exports are being allowed to process import payments.
Even as leading commercial banks struggle to process import documents, the State Bank of Pakistan denied giving any fresh instructions to curb imports.
“State Bank has not stopped banks from making import payments,” the SBP said in a statement released on Monday in response to media queries about the issue.
“Even today, roughly about USD 200 million import payments have been executed. SBP has, however, required prior approval before opening of LCs or registration of contracts for certain types of imports like Cars (CKD), cell phone (CKD) and certain types of machinery. But these instructions were issued on May 20 and not today.”
The drying up of dollar liquidity in the interbank market has led to the collapse of forward premiums on dollar swaps altogether as the SBP has not sold dollars in the interbank in a month.
In the interbank, the forward premiums continued to fall sharply on the first trading day of the week after registering steep falls all last week. Monday saw forward premiums drop by 714 bps, 1406 bps, 22 bps, 2141 bps, and 3057 bps for the one-week, two-week, three-month, two-month, and three-month tenors respectively.
As the payment pressures mount, the rupee continues to take a battering against the US dollar, hitting a high of Rs 213 in the interbank on Monday, before closing just below Rs 210 as per the SBP – depreciating by Rs 1.2095 or 0.58% over Friday’s closing.
Bankers with visibility on developments in forward markets for foreign exchange tell Profit that aside from not selling dollars in the open market, the SBP has also been rationing dollars through various means despite a ban on imports of certain goods. Measures include making “administrative” delays in processing letters of credit.
According to the latest data from the SBP, the country’s foreign exchange reserves stand at $14,943 million as of June 10th falling $233.5 million from the previous week.