KARACHI: Pakistan’s central bank on Tuesday restricted the foreign exchange cash carrying limit for travel and cross-border transactions through debit or credit cards to decrease the outflow of US dollars, a move experts said is meant to ease pressure on the rupee.
Cash-strapped Pakistan has been struggling to ease the pressure off the rupee owing to its low foreign exchange reserves and rein in the price of the US dollar. Despite inflows from multilateral organizations and the International Monetary Fund (IMF), the US dollar has not fallen below the Rs200 mark.
As per the State Bank of Pakistan’s (SBP) new measures, adult individual travelers will be allowed to carry foreign currency equivalent to $5,000 per visit only. The previous limit was $10,000. The bank has also reduced the annual ceiling from $60,000 to$30,000 or the amount equivalent to that in other foreign currencies.
“Those below the age of 18 years (minors) can carry out FCY (foreign currency) equivalent to $2,500 per visit,” the SBP said in a statement. “Further, the annual ceiling to take out FCY for adults and minors shall be $30,000 and $15,000, respectively.”
Previously, three were two categories for minor travelers. Individuals of five years or less were allowed to carry $1,000 with an annual limit of $6,000. Separately, minors falling within the 5-18 age bracket were allowed to carry $5,000 with an annual limit of $30,000 per visit.
The central bank clarified that the per-visit limits will be applicable forthwith, while the annual limits will be applicable from January 1, 2023.
The central bank said it has maintained the same limits for individuals traveling to Afghanistan. The SBP had already allowed a maximum limit of $1,000 per person, per visit, with an annual ceiling amount of $6,000 per person for Afghanistan.
Pakistan’s financial experts said the central bank had taken the measure to discourage misuse of allowable outflow of the foreign exchange limit.
“The central bank’s step is meant to reduce misuse of limits,” Samiullah Tariq, Director Research at Pakistan Kuwait Investment Company, told Arab News. “The move should ease some pressure on the national currency.”
Pakistan currency that closed flat on Tuesday is continuously under pressure due to declining reserves amid the high demand for dollars for import payments.
Pakistan’s forex reserves increased to $8.9 billion by last week due to $1.5 billion inflows from the Asian Development Bank (ADB). The country has imported goods worth $21 billion during the first four months of the current fiscal year, FY23.
This means Pakistan’s existing reserves are not enough to cater to the imports for the next two months.
The central bank said debit/credit cards, which are not aligned with the profile of the individual or are intended for commercial purposes, are being used for transactions.
“Therefore, the SBP has advised banks to ensure that the use of debit/ credit cards for international transactions is aligned with the profile of cardholders and for their personal needs only,” the bank added.
The SBP directed commercial banks that the limits on these cards, as well as payments made through them for both domestic and international purposes, should be aligned with the profile of the cardholder.
SBP has advised banks (Authorized Dealers) to conduct due diligence on individual customers at the time of their onboarding/update of risk profiles and duly incorporate their cross-border payment needs through cards in their profiles.
