To keep the currency rate stable, exchange companies have requested the State Bank of Pakistan (SBP) to prohibit banks from forward booking dollars for import reasons.
In a meeting with Finance Minister Shaukat Tarin and State Bank Governor Dr Reza Baqir, Malik Bostan, Chairman of the Exchange Companies Association of Pakistan (ECAP), urged that commercial banks be instructed to sell dollars to importers as they buy from exporters.
“If banks sell dollars instead of equities, the demand for dollars in the currency market would rise, resulting in a rise in the dollar rate,” he noted. Banks sold a lot of dollars to importers on the forward booked a few months ago, and the SBP allocated around $2.5 billion to banks to match the demand.
Bostan added that the government has also agreed to offer a rebate to the exchange firms for attracting remittances from overseas Pakistanis to increase foreign currency supply through the formal channels.
He said that during the meeting, Finance Minister Shaukat Tarin has promised that the rebate will be provided to exchange companies for receiving inward remittances as per the similar ratio the government gives to commercial banks.
He said the ECAP has also proposed trade with Afghanistan in Pak rupee as importers of neighboring country are buying the greenback from the Pakistani market to make payments for the imports from Pakistan.
The ECAP Chairman said the exchange firms have the potential to attract $10 billion in remittances per year, if the federal government announces incentives for exchange companies.
He also asked for the export of old design dollars as large sums of dollars are with the masses at their homes and bank lockers. These dollars were issued before 2013 and now the commercial banks are neither buying these old notes from the public, he mentioned. This will help to bring more foreign exchange in the market, he added.
“The SBP must allow exchange companies to export old dollars on a daily basis like other third foreign currencies, Exchange Companies will deposit these dollars in bank accounts,” Bostan said.
The exchange companies have already provided $4.5 billion to the government last year, taking a total of $13 billion since 2018, he maintained.
He said the measures taken by the government to curb unnecessary dollar demand in the market have increased the demand for the black market, and added that these measures must be revisited.
During the meeting, the Finance Minister and Governor SBP assured to resolve all issues of exchange companies on top priority basis, Bostan said.