KARACHI: The State Bank of Pakistan (SBP) on Monday allowed exchange companies to export foreign currencies other than the US dollar and bring in the greenback in their foreign currency accounts maintained with banks in Pakistan.
The central bank said the decision has been taken to enable the exchange companies to divert the flow of foreign exchange, mobilised by them, towards the interbank market. “It has been decided to allow the exchange companies to export US dollar on a consignment basis through cargo/security company,” the SBP said, directing firms to ensure the availability of a sufficient amount of US currency notes at their counters to meet the demand of the public.
The central bank said it should also be ensured that the proceeds of such export must reach in US dollar account of the exchange companies maintained with banks in Pakistan, within three days of such export.
“Exchange companies shall surrender 100 percent of foreign exchange received on the export of US dollar, in the interbank market on the same day,” the statement said.
“This facility will be available until September 30.”
Pakistan-Kuwait Investment Company Head of Research Samiullah Tariq told Geo.tv that the move taken by the state bank is going to improve the dollar supply in the market.
The country is suffering from fast depleting foreign reserves, a declining currency and widening fiscal and current account deficits. Pakistan's foreign currency reserves have fallen to $7.83 billion, lowest since 2019 due to the increased debt payments and a lack of external financing this month.
The data released by the SB showed that the country's foreign reserves have dropped by $555 million or 6.6 percent on a weekly basis. The forex reserves stood at $8.385 billion a week earlier on August 5. The current available forex reserves with the State Bank are enough to cover little over a month's imports.
Debt repayments are expected to moderate during the next three weeks of this month, the central bank said. “In fact, around three-fourth of debt servicing for the month of August was concentrated during the first week,” it added.
Analysts believe the current fall in foreign reserves is because the country is in a drought of external funding with the reserves depleting fast amid a stalled $6 billion International Monetary Fund programme. Once the IMF programme and the expected lower current account deficit amid falling imports help shore up dwindling foreign reserves.