KARACHI – The State Bank of Pakistan (SBP), on Wednesday, lifted ban on the export of all types of foreign currencies (FCys) except the US dollar after, what the SBP spokesman said, was a result of stabilisation in the country’s exchange rate.According to Exchange Companies Association of Pakistan (ECAP), the “good” decision would help the country avoid smuggling of foreign exchange and a monthly loss of over $200 million that the money exchangers used to contribute in the exchequer before the ban.
The move came after a meeting of SBP officials and ECAP representatives at the State Bank on Wednesday, preceded by another meeting on January 6. The central bank allowed, through exchange companies, the export of cash in UK Pound Sterling, Euro and UAE Dirhams through withdrawing Para 3 of its circular (F.E Circular No. 4) which was notified on May 09, 2008. The ban on dollar export, however, remains intact. “It has, now, been decided to withdraw the said instructions (under Para 3 of F.E. Circular No.4) with immediate effect,” the State Bank notified the exchange firms through F.E Circular No. 1.
The SBP circular said that the exchange companies established under F.E. Circular No. 9 of 2002 would be allowed to export all types of FCYs other than US Dollar in accordance with the prescribed procedure and declaration at SBP-Customs joint booths at Jinnah International Airport, Karachi and Allama Iqbal International Airport, Lahore.
The money exchangers would, however, ensure that their foreign currency accounts in the local banks receive US dollars equivalent to the volume of exported FCys within three working days of the shipment.
“The Exchange Companies shall, however, ensure to receive the equivalent US Dollars against exported currencies in their foreign currency accounts maintained with banks in Pakistan within three working days,” the bank circular said adding “An evidence to this effect should immediately be submitted to this department against each shipment.” According to its Chief Spokesman Syed Wasimmuddin, the State Bank took the measure, which is envisaged to increase the inflow of foreign remittances (dollars) into the country and further stabilise the exchange rate, after seeing the country’s exchange rate pressures easing.
“The ban was primarily imposed to check the flight of capital and the resultant fluctuation in dollar rate in the local market, but now as the exchange rate has stabilised the ban has been lifted,” Wasimuddin told Pakistan Today. According to SBP spokesman, the fact that the oil import payments were now not being made through the State Bank had also eased pressures from the regulator. “Now that pressure is not there,” he said adding that exchange companies would, however, have to ensure that they bring dollars to the country equivalent to the exported FCys.
Keeping other relevant instructions intact, the SBP is said to have acted in line with a longstanding demand of the exchange companies to lift ban due to which, the latter have reportedly claimed to have faced huge losses. Since the imposition of ban in 2008, the money exchangers had, reportedly, been surrendering the embargoed currencies in the inter-bank deals and were not getting good exchange rates.
“We welcome the good decision that would curb the smuggling of foreign exchange, boost the supply of dollar in inter-bank that would positively reflect on the exchange rate,” ECAP Chairman Malik Bostan told Pakistan Today. Thankful to former Finance Minister Shaukat Tarin and SBP Governor Shahid H Kardar for the immediate action, the ECAP chief said the ban was costing the country over $ 200 million every month as the banks were hardly able to contribute Rs 200 million against $400 million of the money exchangers. Bostan said overseas Pakistanis in the concerned countries would also be able to get encouraging exchange rates for their remittances.
