Japanese yen has been added as the third currency along with USD and euro to the Asian Clearing Union (ACU) mechanism with effect from next year, a circular issued by the State Bank of Pakistan (SBP) said Monday.
ACU clearing arrangement provides a clearing system through which all eligible payments for current international transactions among the member countries, other than payment relating to travel, are compulsorily settled through the ACU mechanism, which allows payment in the Asian Monetary Unit (AMU) or the currency of the participating country in which one party to the transaction resides.
The SBP has already issued detailed instructions regarding the settlement of transactions through ACU mechanism in Chapter 13 of the Foreign Exchange Manual.
Acceding to the SBP circular, it has been decided to include ACU Japanese yen as the third ACU currency along with USD and euro, wef, January 1, 2020.
The ACU yen would be equivalent in value to one yen. Accordingly, transactions under ACU mechanism, in addition to ACU Dollar (ACUD) and ACU Euro (ACUE), may also be denominated and settled in ACU Yen (ACUY) from January 1, 2020.
In this regard, Authorized Dealers (ADs) may establish ACUY accounts with their correspondents in ACU member countries and open their correspondents' ACUY accounts with them.
The transactions in ACUY would be reported by ADs to the SBP and settled by SBP separately likewise in other two ACU currencies. Accordingly, three separate accounts will be maintained for the settlement of each ACU currency including ACU Dollar, ACU Euro and ACU Yen.
Further, with a view to encouraging ADs to maintain reasonable/sufficient balances in their accounts to ensure timely payments, the SBP has permitted ADs to pay/receive interest, at their discretion, on these (ACUD, ACUE & ACUY) accounts as per mutually agreed terms and conditions.
The balances of ACUD, ACUE & ACUY accounts together with other FCY/Nostro accounts would however be subject to the overall exposure limits of ADs, the circular added. The SBP said that all other instructions on the ACU mechanism will remain unchanged and will be equally applicable to the ACUY transactions and accounts.
Copyright Business Recorder, 2019
Comments
Comments are closed.