16 October 2004	Saturday	01 Ramazan 1425

KARACHI, Oct 15: The State Bank of Pakistan has clarified a news report published in the October 14 issue of Dawn headline: "Easing pressure on rupee: Govt may review Forex Liberalization Act.

In a statement, issued on Friday, the SBP described the report as "incorrect and misleading". It said: "It is categorically denied that the government has any intentions or plans to make any reversal of the existing policy of foreign exchange liberalization.

Since no legislation exists under the name of Forex Liberalization Act or 'Exchange Rate Liberalization Act 1992', as mentioned in the report, the question of its likely review by the government does not arise.

"Further, the slight depreciation of rupee against the US dollar since April 2004 is a normal phenomenon and has not happened in any way because of 'unbridled liberalization'.

This is a logical consequence of soaring oil prices, increasing trade gap and pre-payments of foreign currency denominated loans. In the end, market forces determine the exchange rate and the State Bank takes steps only to smooth out any volatility in the exchange rate against the dollar.

"It may be pointed out that export of non-dollar foreign currencies through Karachi airport is allowed under an established mechanism declared to the customs and verified by the State Bank of Pakistan. The equivalent dollar amount is received back into the country.

The illegal transfer of dollars by M/s H&H Exchange Company, as reported in your news item, is a different matter and does not come under the ambit of the liberalization of forex regime under the Protection of Economic Reforms Act, 1992."