Currency firms to seek SBP nod before dollar exports

KARACHI: The State Bank of Pakistan (SBP) has asked the exchange companies to take its permission before exporting dollars to the international markets, a circular said on Tuesday, in a bid to avoid shortages of the US currency in the country.

Last month, the SBP allowed the exchange companies to export US dollars to divert the flow of foreign exchange mobilised by them towards the interbank market. The exchange firms were permitted to export dollars (hard cash) on a consignment basis through cargo and security companies. This facility would be available until September 30. After the SBP's directives, the exchange firms were able to export dollars to the money changers in Dubai and Bahrain.

However, now the central bank has withdrawn this decision.

“It has been decided that effective from September 7, 2022, exchange companies shall seek prior approval from the SBP for such export of US currency notes,” the SBP in a circular. Dealers said this move would help improve dollar liquidity, narrow the US rate difference between the interbank and open markets and help rupee recover.

The rupee has been under pressure in the open market due to the unavailability of dollars, sparked by smuggling of the foreign currency to Afghanistan. Following the government's lifting of the import ban on non-essential luxury goods, the interbank market is also under strain due to import payments.

Currency dealers said the open-market rates of foreign currencies had been on the higher side for some time. One of the major reasons for the shortage of dollars was large-scale, which is weighing on the forex market.

They said India was buying dollars from Iran at higher prices than the markets, giving smugglers incentive to move dollars to Iran. According to the market buzz, exchange companies were seriously running short on the greenback.