12 October 2004	Tuesday	26 Shaban 1425

KARACHI, Oct 11: The State Bank has allowed B-category exchange companies to hold foreign currencies equivalent to 25 per cent of their respective paid up capitals at the end of each business day.

Thus, an exchange company of B-category having a capital base of Rs20m "may carry over to the next day total foreign currencies holding or exposure" equivalent to not more than Rs5 million. The central bank has notified this decision to all 33 exchange companies in B-category through a letter.

"The decision will certainly help us operate more smoothly than at present," said Hanif Gohar, President of the Association of All Pakistan Exchange Companies B. The decision enables mini exchange companies to avoid losses due to rapid fluctuations in the value of foreign currencies particularly the euro and the pound sterling.

Earlier, the central bank had asked all the mini exchange companies not to hold foreign currencies at the end of the day, but their managers had protested over this decision and demanded its reversal. "The present facility falls short of our demand, but it would help us operate smoothly," Mr Gohar told Dawn.

The exchange companies in B-category are those that are established with a minimum paid-up capital of Rs20m, whereas mainstream exchange companies are the ones having a minimum capital of Rs100m. More than a dozen mainstream exchange companies are also in operation.