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Break in rupee decline as SBP restricts dollars trade, outward flow

Biometric verification for all forex transactions equaling $500 and above

SAMAA | - Posted: Oct 7, 2021 | Last Updated: 2 months ago
SAMAA |
Posted: Oct 7, 2021 | Last Updated: 2 months ago

After allowing the rupee to float freely in the open market, the central bank moved to impose further restrictions on the trade and outward flow of foreign exchange, bringing respite to the battered Pakistani currency.

A few weeks after the rupee touched a record low of Rs172.8 against the US dollar in the open market, the rupee posted slight gains in the inter-bank market on Thursday.

The State Bank of Pakistan or SBP issued new rules for foreign currency transactions by exchange companies.

According to the new rules, all travelers going to Afghanistan will be allowed to carry only $1,000 per person per visit with a maximum annual limit of $6,000.

Furthermore, the exchange companies will now be required to conduct biometric verification for all foreign currency sale transactions equaling $500 and above and outward remittances. This requirement will be applicable with effect from October 20.

All foreign currency transactions by exchange companies and outward remittances equaling $10,000 and above will only be done against receipt of funds via cheque or banking channels.

These regulatory measures will help improve documentation of the sale of foreign currency by exchange companies and place a check on the undesirable outflow of foreign currency.

Earlier, the central bank imposed 100% cash margin requirements on the import of 114 items, taking the total number of items subject to cash margin to 525. This step was also taken to help discourage imports and support the balance-of-payments.

A few days earlier, SBP revised prudential regulations for consumer financing prohibiting financing for imported vehicles. This targeted step is designed to moderate demand growth in the economy, leading to slower import growth and thus supporting the balance-of-payments.

New rules also tightened regulatory requirements for financing of domestically-manufactured/ assembled vehicles of more than 1000 cc engine capacity and other consumer finance facilities such as personal loans and credit cards.

Experts believe that the pressure on rupees was also lessened after authorities carried out crackdowns on people hoarding and selling and buying dollars in the black market.

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Rupee respite continues as SBP restricts dollars trade, outward flow, dollar rate, Pakistani rupee, forex rates, Pakistan imports
 

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