KARACHI (January 01 2003) : The State Bank of Pakistan has announced that third-currency exposures would also be available for importers, allowing forward cover for any duration, and included sight exports bills for discounting against the forward contract.
“In case an exporter books forward cover and presents there against an export bill for discounting, the Authorised Dealer may treat discounting of the usance or sight bills as delivery against the forward contract, provided such bills are presented for discounting during the option delivery period only,” said a circular issued by the State Bank on Tuesday.
In all other cases the foreign currency receipts in respect of discounted bills will not be considered as delivery against forward contract and the Authorised Dealers will discount the bill at its current applicable rate and close out the contract on maturity, said the circular.
The exporters have the option to cover their third-currency exposures in case goods exported are involved in a convertible currency.
“In order to deepen the forex market, it has been decided to allow such facilities to importers also,” said the SBP circular.
“In the case of export of goods to be invoiced in any convertible currency other than US Dollar, it is permissible for the Authorised Dealers to buy forward the concerned currency in terms of US Dollar, if the exporter wishes to cover only such risk and to carry dollar versus rupee risk himself,” said the circular.
On realisation of such proceeds the equivalent US Dollar amount at the booked rate will not be delivered but covered at the spot rate and the rupee equivalent will be paid to the exporter.
In case, if exporter does not want to carry dollar versus rupee risk himself and wants to cover the same in the forward market, the same would also be permissible.
The Authorised Dealers will conduct such transactions within their approved “Exchange Exposure limits.”
“In the case of import of goods invoiced in any convertible currency other than US Dollar, it is permissible for Authorised Dealers to sell forward the concerned currency in terms of US Dollar, if the importer wishes to cover such risk and to carry dollar versus rupee risk himself, said the circular.
On the date of such payment the equivalent US Dollars amount at the booked rate will not be claimed but converted at the spot rate and the rupee equivalent would be claimed from the importer.
In case, if importer does not want to carry Dollar versus Rupee risk himself and wants to cover the same in the forward market, the same would also be permissible.
The Authorised Dealers will conduct such transactions within their approved Exchange Exposure limits.
The circular further says that earlier no forward transactions could be made for tenor of less than one month. It has now been decided to remove this restriction.
“Authorised Dealers may provide forward cover for exports, imports, foreign private loans and repatriable foreign currency loans (excluding loans obtained by foreign contractors and branches of foreign companies) for any duration,” said the circular.