The State Bank of Pakistan (SBP) has recently taken a significant step by lifting restrictions on the import of US dollars, allowing exchange companies to import cash against the value of their export consignments, if required.
According to a circular issued by the central bank, exchange companies now have the flexibility to import cash in US dollars on a need basis. They can do so against the value of their export consignments of permissible foreign currencies, and the import should be carried out within five working days through reputable cargo or security companies.
However, the SBP has put certain limitations on this new arrangement. It will be effective until December 31, 2023, and during this period, exchange companies can only import cash US dollars up to 50% of the value of their export consignments.
The central bank has emphasized that while availing this facility, exchange companies must adhere to all relevant laws and regulations, both in Pakistan and the jurisdiction from where the US dollars are being imported.
Additionally, the transactions related to cash import must be accurately recorded in the exchange companies’ books of accounts.
Zafar Paracha, the General Secretary of the Exchange Companies Association of Pakistan (ECAP), has expressed positive views on the SBP’s decision. He believes that allowing the import of dollars will help bridge the gap between the open market and interbank rates, which can have a positive impact on the country’s foreign exchange situation.
Paracha further highlighted that this move by the State Bank will play a crucial role in overcoming the dollar shortage in the country, making it a welcome and much-needed measure.By removing restrictions and introducing this facility, the State Bank of Pakistan aims to create a more conducive environment for exchange companies and facilitate smoother foreign currency transactions.
This move is expected to have positive effects on the country’s economy and foreign exchange market, as it encourages the flow of US dollars and helps stabilize exchange rates.
As the situation unfolds, market participants will closely monitor its impact and effectiveness in addressing the dollar shortage while ensuring compliance with regulatory standards.