Exchange firms allowed forward sale

KARACHI: Exchange companies on Thursday were allowed to cover their risks against exports proceeds through forward sale transaction with banks up to five working days, the State Bank said in a circular.

To facilitate exchange companies in managing exchange rate risks associated with the realisation of export proceeds against export of permissible foreign currency notes, it has been decided that exchange companies may enter into forward sale transaction with banks up to five working days against export proceeds in US dollars.

According to the circular, exchange companies may sell forward the export proceeds received from abroad in US dollars to banks against the export of permissible foreign currencies made on consignment basis through cargo or security companies.

Forward sale facility may be availed up to maximum five working days (including both transaction and settlement days), it added.

President Forex Association of Pakis­tan Malik Bostan said that excha­nge companies had demanded the provision of forward cover facility which has been fulfilled.

“The SBP’s decision for providing risk cover through forward booking will bring stability in the exchange rate while the volume of exports proceeds would also increase,” he said.

“Once the restrictions over travelling of Pakistanis residing in the Middle East and other countries are lifted, the volume of currency exports and ultimately imports of US dollars will surely increase,” Mr Bostan said.

“During the current fiscal year, we expect to bring $3 billion export proceeds compared to $2.5bn in FY20,” he said.

According to the SBP circular, exchange companies are required to bring export proceeds within five working days from the date of shipment.