KARACHI, Dec 12: The State Bank on Friday further tightened export of foreign currencies to check smuggling and flight of capital from the country.

Despite the liberalisation of foreign currency regime, mostly undertaken by the former government, the procedure for sending foreign exchange abroad has been made very difficult these days, especially after reports of flight of foreign exchange from the country.

The State Bank has already banned export of UK pound sterling, euro and UAE dirham, while the export of dollars was banned much earlier.

The ban was introduced to protect the economy from the sudden flush out of foreign exchange from the country as it has been facing the problem of vanishing foreign exchange reserves since October 2007.

“All the currency carriers must be the employees of the exchange company,” said the new circular of the SBP.

Currency dealers said the condition of employee of an exchange company for the carrier, was added after the arrest of owners of Khanani and Kalia Exchange Company. The company had the biggest network in Pakistan.

After the arrest and suspension of the company’s operation, the government and investigating agencies revealed that hundreds of millions of dollars were smuggled out from the country through this exchange company.

The exchange companies are allowed to take foreign currencies other than dollar, pound sterling, euro and UAE dirham to the Dubai market and bring back the equal amount of dollar in the country. Earlier these companies were free to send their foreign currencies through any one.

Most of the time more than one exchange companies pooled their foreign currencies and send these through one trusted person to save the expenses.

Now after the condition, each exchange company will have to send his own employee to export foreign currencies that will certainly increase their cost of doing business.

“It would be compulsory for exchange companies to finalise the deal with the overseas entity before the shipment of each export consignment,” said the circular.

“The system generated deal ticket (specifying consignee’s name, address, contract details, amount, exchange rate etc) must be accompanied with the each request for exporting permissible foreign currencies,” said the circular.

Commenting on the new conditions the currency dealers said the business was made difficult as a lot of information has been involved.

They also expressed reservations about the rate of currencies before sending it to the market as the frequent fluctuation is normal in the exchange rate market.