Forex firms receive $10mln in 2 days as SBP relaxes lockdown

KARACHI: Foreign exchange firms managed to receive around $10 million worth of remittances in two days after the central bank allowed them to open their branches amid coronavirus-sparked lockdown, a top official said on Wednesday.

Malik Bostan, president of Forex Association of Pakistan told The News that the State Bank of Pakistan (SBP) allowed exchange firms to open their outlets to give citizens access to remittances from expatriates working abroad.

“Almost 50 percent of the exchange companies have started operations after the SBP’s permission, while ensuring safety measures in our branches across the country,” Bostan said. “We had been demanding the SBP for the opening of the money transfer companies mainly for the people who rely on income from relatives in foreign countries as the coronavirus lockdown had closed their major source of income.”

Sources said law enforcement agencies are ‘forcefully’ closing branches and outlets of the exchange companies. Consequently network of firms is facing difficulties in their day to day operations and unable to provide essential financial services to general public, they added.

Bostan said the remittances are constricted due to lockdown, putting pressure on the rupee and the foreign exchange reserves. “After the permission in just two days, exchange firms have managed to receive around $10 million worth of remittances,” Bostan said. “The step could provide relief to beneficiaries badly hit by coronavirus pandemic.”

The smooth inflows of remittances are likely to help stabilise local currency, which has been under pressure since last month because of foreign portfolio outflows from the country, he added.

Around $375 million of divestment from government securities was estimated in the last 10 days, bringing the rupee down to its all-time low. SBP Executive Director Irfan Ali last week said the government might direct provincial governments not to close down the branches of exchange companies licenced by the SBP and let them continue their operation as they are financial service providers like banks.

“The SBP has already advised exchange companies to observe all necessary measures to avoid spread of COVID-19,” Ali said in a letter to the government on April 3.

Pakistan is passing through difficult times due to coronavirus outbreak. People are undergoing extreme economic hardships. The lockdown has hit hard below the belt of low income group, in particular.

“In response a number of overseas Pakistanis are sending funds from overseas to support immediate families, extended families, and friends, therefore, SBP has advised exchange companies to receive such transactions and deliver proceeds to beneficiaries in Pakistan,” Ali said. The SBP is encouraging public to use digital payment services as much as possible to help banks provide services with minimal staff to ensure their safety.