KARACHI: Pakistan has allowed currency exchange companies to import 50 percent of dollars from abroad amid rapid depreciation of national currency after the government authorized clearance of import cargos stuck at various ports in the country.
The Pakistani rupee has been on a losing spree during the last eight trading sessions due to the growing demand for US dollars after the government lifted restrictions on the opening of Letters of Credit (LCs) that was imposed due to a shortage of dollar liquidity.
Given Pakistan’s overall financial situation, the central bank updated instructions for the import of dollars by the exchange companies on Tuesday.
“Exchange Companies, on need basis, may import cash US Dollars against the value of their export consignments of permissible foreign currencies within five working days, through reputed cargo security companies,” the State Bank of Pakistan (SBP) informed currency dealers through a circular.
“This arrangement shall initially be in place till December 31, 2023 and will be subject to the condition that total cash US Dollars imported by an Exchange Company during this period shall not exceed 50 percent of the value of its export consignments.”
Pakistani currency dealers said they were continuously clamoring to import dollars against the export of other currencies.
“The dollar exchange rate against the Pakistani rupee was increasing despite inflows from Saudi Arabia, the United Arab Emirates and the International Monetary Fund,” Malik Bostan, chairman of the Exchange Companies Association of Pakistan (ECAP), told Arab News on Wednesday.
He said the exchange companies export around $5-7 million worth of currencies on a daily basis which were imported through banking channels.
“This measure of the central bank will improve liquidity of dollar in the local market,” Bostan said, adding its impact had already started with the appreciation of rupee by around Rs2 against the greenback in the interbank and Rs1 in the open market after eight bad trading sessions.
The SBP has directed the exchange companies to include arrangement in their deal with the overseas entities.
“The system generated deal ticket shall also include particulars of the amount to be imported as cash US Dollars, if any, out of the total export consignment,” it directed.
The exchange companies are required to provide written intimation in advance before availing the option.
They will also provide original deal ticket of foreign banks or exchange companies, clearly showing the number of imported US dollars.
Other than that, the companies will ensure that all transactions related to the import of greenback are properly reflected in their books of accounts.
Bostan said the move would not only address the dollar crisis but also boost the value of the national currency in the coming days.
“The sale of dollar has almost stopped and only $500,000 have been traded today by noon,” Bostan informed, saying he anticipated the demand to decline further.
