- Exchange Cos were bound to sell 10% dollar to the banks against other currencies exports
The State Bank of Pakistan (SBP) on Tuesday gave two-month exemption to the Exchange Companies from surrendering 10 percent dollar to the banking system against its exports of other foreign currencies and directed them to reduce the gap between Interbank and Kerb market.
According to the SBP Manual, all the exchange companies were bound to sell their 10 percent US dollars received against the export of foreign currencies in the interbank market.
SBP governor Ashraf Mahmood Wathra held a meeting with the owners of the exchange companies and heard the issues regarding USD prices in the open currency market.
The dollar rates in the open market are at Rs 108.40 for buying and Rs 108.65 for selling for the last few weeks. The gap between interbank and Kerb is Rs 3.40.
“SBP governor has assured us in the meeting that the SBP would provide dollars to the Companies to bring the dollar’s rates down in the open market, said Malik Bostan, president Forex Association of Pakistan. The SBP further assured that the SBP will take action against those banks in case of refusal to clear cheques of foreign currency account holders in future.
He said, “Dollar will start declining in the open market from this week and close at Rs 106 and below it.” The central bank has given us an exemption for the next two months, he added.
The exchange companies informed SBP head that they are facing a shortage of dollar because of lower remittances for the last few months, said Zafar Paracha, secretary general Exchange Companies Association of Pakistan (ECAP).
“After getting this concession from SBP, we are looking greenback down at Rs 106 or Rs 107 in next few weeks,” he informed on the phone. The exchange companies will not sell their dollars to the bank in Pakistan and we will use these dollars against counter’s demand, he added.
He further claimed that the dollar is being smuggled from Pakistan to Dubai while people are importing gold and investing their money in Dubai projects etc.
“The inflows of remittances in exchange companies have come down by 50 percent in last six months of the current fiscal year,” said Malik Bostan. We can blame the current situation in the Middle East countries for this shortage, but, actually we are still unable to find out the main reason, he added.
He said the governor SBP has agreed to relax the companies accepting their demands to enhance the dollar liquidity by exempting the sale of the dollar to the interbank market.
For the last few years, the country’s remittances were stable despite lower exports and FDI and this declining scene surfaced after restructuring of property valuations on retail and purchase of lands throughout the country. This decision of Ishaq Dar proves as the last nail in Pakistan’s construction industry.
Overseas Pakistanis were sending hard earnings in Pakistan for the purchase of properties and earning profits on it, a currency expert said.
A major demand of the dollar is coming from the gold importers who are buying yellow metal from Middle-East countries owing to a big price difference of Rs 3000-4000 in Pakistan, the currency experts said, adding that the other demand is from the local builders who are investing their money in big projects of Dubai.
