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Islamabad: The federal government has decided to limit foreign currency bought per person and limited outflow to $50,000 per year with the aim of lowering the open market’s speculatively high dollar value.
The daily currency purchase and outward remittance limit have been reduced by half, to $5,000, with a maximum annual ceiling of $50,000. The State Bank of Pakistan (SBP) will issue a notification relatively soon to modify the existing exchange company regulations and put these decisions into effect.
When the PKR value remained above Rs. 230 against the US dollar in the open market more than a month ago, Finance Minister Ishaq Dar met SBP Governor Jameel Ahmad to discuss options to help normalize the exchange rate.
During their meeting, it was decided that the daily maximum limit for purchasing foreign currency in the form of cash or outward remittances from all exchange companies would be whittled down from $10,000 to $5,000. In addition, the maximum limit per person per calendar year for purchasing foreign currency in cash or outward remittances will be lowered from $100,000 to $50,000. Apart from halting all foreign trade except essential imports, Dar and Jameel agreed these decisions may help relieve pressure on the country’s foreign exchange reserves, which currently stand at $8.9 billion.
And since fines and license suspensions for a number of foreign currency dealers were not working, it was decided that the Federal Investigation Agency (FIA) will start taking action against dealers engaging in speculative trading. It bears mentioning that the central bank has yet to reprimand commercial banks involved.
In September, the dollar reached an all-time high level against the rupee at Rs. 240. The banking regulator issued show-cause notices to eight banks for quoting high dollar prices in the local market. A few days later, a parliamentary committee directed the SBP to take appropriate action against all banks and exchange companies involved in volatility in the exchange rate in recent weeks. The central bank did not only initiate the inquiry but also tightened rules of foreign exchange operations to contain the free fall of the Rupee against the dollar.
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