April 30, 2008	Wednesday	Rabi-us-Sani 23, 1429

KARACHI, April 29: The State Bank of Pakistan has forced exchange companies to sell more imported dollars in the inter-bank market than a previous mandatory amount to streamline the current volatile situation in the currency market which impacted negatively the exchange rate mechanism.

The State Bank on Tuesday amended the Exchange Companies Rules & Regulations.

Earlier, the exchange companies were required to ensure that a minimum of 10 per cent of foreign currencies exported by them and a minimum of 10 per cent of foreign exchange received by them on account of inward home remittances (in equivalent US dollars) must invariably be sold in the inter-bank market on an ongoing basis.

According to the fresh amendment, these companies are now required to ensure that they bring a minimum of 25pc of foreign currencies exported by them in their FCY accounts maintained with banks in Pakistan on an ongoing basis.

Of the amounts so brought in, the exchange firms would be required to sell at least 10pc in the inter-bank market, whereas the balance amount, out of the above mentioned 25pc, would be required to be withdrawn in cash (US dollars) from FCY accounts maintained with banks in Pakistan.

It has also been decided that a minimum of 15pc, instead of the earlier 10pc of foreign currencies received by the exchange companies on account of inward home remittances (in equivalent US dollars) must invariably be sold in the inter-bank market on an ongoing basis.

The SBP asked the exchange companies that a report be submitted to the SBP by each exchange company every Monday, giving an aggregate FCY amount mobilised under the above two categories and the amount sold in the inter-bank market, along with the name of the counter parties and relevant dates.

The exchange companies are also required to report to the SBP on a daily basis all transactions of US$ 5,000 or above (or equivalent thereof) made by the exchange company on account of (i) sale/purchase over the counter and (ii) outward remittances with all related particulars.

Through another circular, the SBP slashed advance payment against imports.

Currently importers are allowed to effect advance payment against irrevocable letters of credit and firm registered contracts up to 100pc of the FOB or CFR value of the goods subject to terms and conditions mentioned therein.

“It has now been decided that the said facility will be available only against irrevocable letters of credit and to the extent of 50pc of the FOB or CFR value of the goods,” said the SBP.

Further, the penalty rate has been enhanced from 0.25pc to 0.50pc.

The advance payment facility (up to US$10,000 per invoice for import of eligible items as allowed earlier) will now remain available to importers only against import of spares, raw material by manufacturing and industrial users for their own use without the requirement of L/Cs or bank guarantees.

The authorised dealers would be allowed to provide forward cover facility against imports on L/C basis for not less than one month and up to a maximum period of one year on rollover basis.