Controlling rupee’s value: Read this before you buy US dollars

Central bank introduces a new set of restrictions that will impact individual travelers and businesses alike
Sep 23, 2022
<p>Photo: Online/file</p>

Photo: Online/file

With the rupee hovering near its all-time low value, the central bank on Friday introduced a set of stringent measures to curb smuggling and hoarding of the increasingly hard-to-find currencies, routing moderate to large currency transactions through banking channels.

In a notification issued on Friday, the State Bank of Pakistan (SBP) amended the rules for exchange companies for the purchase or outward remittances of foreign currencies as listed under Para 9 (g) and Para 9 (s) of Chapter 3; and Para 12)(d) of Chapter 8 of the Exchange Companies Manual.

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“To further strengthen the regulatory regime for Exchange Companies, and encourage customers to use banking channels for purchase of foreign exchange from Exchange Companies, the existing regulations prescribing the scope of business of Exchange Companies have been amended, which will be effective immediately,” the notice read, adding that it applies to both regular exchange companies and exchange companies holding ‘B’ category licences.

Purchase of foreign currency

If you intend to purchase foreign currency, particularly US dollars, exchange companies have been directed that “All foreign currency sale transactions of $2,000 or above (or equivalent in other currencies) against rupees shall be conducted by the exchange companies through bank transfer or cheque from the personal account of the customer.”

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The exchange companies have been directed to provide SBP with the transaction/instrument reference number and the name of the bank transferring funds/ issuing the instrument, along with the identification document number of the customer.

This would apply to both regular and exchange companies holding the ‘B’ category licences.

READ: You may soon have to declare currency over $5,000 while travelling abroad

Outward remittances

Apart from simple currency exchange at their tills, all foreign currency sale transactions for outward remittance of $2,000 or above (or equivalent in other currencies) against rupees shall be conducted by the Exchange Companies through bank transfer or cheque from the personal account of the customer.

A similar documentation process will be applicable.

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