State Bank of Pakistan Tuesday asked commercial banks to immediately stop forward booking of US dollar and may impose up to 50 percent cash margin on opening of every Letter of Credit (LC) of luxury items. Following a 2.4 percent deprecation in value of Pak Rupee against US dollar in a single day, SBP conducted a high-level meeting with presidents of commercial banks to discuss the currency movement in the interbank market. Ashraf Mehmood Wathra Governor SBP chaired the meeting held at SBP head office.
During the meeting, banks were directed to keep their business transactions fair and avoid unnecessary foreign exchange transactions particularly import purpose as reportedly a massive surge has been witnessed in the number of LCs on rumours of further Pak Rupee depreciation. Sources said that dollar outflow almost doubled on Monday due to forward booking of greenback as there were rumours that government had decided to devalue Pak Rupee against the dollar. Therefore, in order to discourage the artificial demand of dollar, SBP asked banks to immediately stop forward booking and may impose up to 50 percent cash margin on LCs of luxury or unnecessary items to discourage the artificial demand.
Banks were also directed to closely monitor the inflows and outflows of greenback to avoid shortage of dollar in the domestic market. During the meeting, SBP appreciated banks' efforts towards realisation of export proceeds and they were asked for more attempts for arrival of pending export proceeds. Banks were also directed to focus on fair business practices.
Addressing the meeting, the Governor said that SBP wants banks to curb speculation on Pak Rupee and keep the exchange rate stable. Although, current deprecation of Pak Rupee is due to international currency movement and financial developments around the globe, SBP remains vigilant of foreign exchange market and is closely monitoring the movement of currency in international and domestic market, he added.
Following the global currency movement, on Monday, interbank market reacted negatively as dollar gained Rs 2.60 vs Pak Rupee in a single day to reach Rs 104.50 in interbank market. However, after SBP meeting with presidents of banks, Pak Rupee appreciated and dollar declined to Rs 104.25 in interbank market. Besides meeting with banks, sources said, SBP has also asked Federal Board of Revenue to check the import transactions, which are being made without LCs.