KARACHI, Feb 12: The State Bank for the first time capped the spread between buying and selling of foreign currencies in the open foreign exchange market, the State Bank said in a circular on Tuesday.

“It has now been decided that the maximum spread allowed between the buying and selling rates of foreign currencies must not exceed twenty-five (25) paisa, at any given time,” said the circular.

The exchange companies have been selling or buying dollars at different rates at different places. Generally the spread is higher for smaller transactions, while the spread is negotiable if a client offers big amount either for buying or selling.

“It is reiterated that notice or display board accurately declaring the prevailing exchange rates applicable for respective currency sale, purchase or transfer must be displayed at a prominent place in each branch or franchise,” said the circular. The circular was issued to the chief executives of all exchange companies including the ‘B’ category exchange companies.

Some exchange companies said they received verbal order to maintain a particular exchanger rate in the open market.

“We are selling dollar at Rs99.60 and buying at Rs99.40 on verbal instructions from the relevant authority,” said a currency dealer not wanted to be quoted.

However, the Chairman of Exchange Companies Association of Pakistan Malik Bostan denied this instruction.

“We have received the State Bank’s circular regarding the maximum spread but no such instruction was given regarding the fixing of rate in the open market,” said Bostan.

The SBP has also asked Exchange Companies’ Head Offices to submit daily a consolidated report to its Exchange Policy Department.

The rupee also cross Rs100 to the dollar on Monday after the State Bank made a payment of $146 million to the IMF.