KARACHI (February 16 2003) : The State Bank has stopped the money changers from taking out foreign currency notes, other than dollars, to Dubai, and has authorised only two foreign exchange companies to take-over the whole business.
The State Bank on Saturday issued a circular which authorised the representatives nominated by duly licensed exchange companies to take out of Pakistan foreign currency notes, other than US dollars, for the purpose of exchanging the same abroad into US dollar currency notes.
“In the light of the above, the permission given to representatives of Forex Association of Pakistan in terms of letter dated July 17, 2001, will terminate after 15th February, 2003, and will not be extended beyond February 16, 2003,” said the SBP circular.
The letter has created panic among the money changers who immediately wrote a letter to the Governor of the State Bank asking him to withdraw the decision.
“The experiment had been a failure in the past when the National Bank of Pakistan was authorised to take out these currencies, instead of money changers, and the bank could not handle the influx of currencies from 479 money changers,” said Malik Bostan, President, Forex Association of Pakistan (FAP).
He said how two exchange companies, which are in their initial stage, can handle 479 money changers and they are only in Karachi.
Money changers used to take different currencies from Pakistan to Dubai and bring back US dollars of equal amount.
He said he was surprised that such a big decision was taken by the State Bank without consulting the money changers who know the technicalities of the currency business.
“It is highly disappointing; it will generate unhealthy environment, and will create artificial shortage of dollars,'' he added. Moreover, scarcity of dollars would weaken the Pak rupee and will also promote hundi system which at present is nearly eliminated, he said.
When National Bank was authorised to deal the same currency business in 2001, the US dollar had suddenly jumped by Rs 7 a dollar as the greenback appreciated from Rs 60 to Rs 67 per dollar, he said.
Boston said that average take-out foreign currency, other than US dollars, from Pakistan is equal to about 150 million dollars per month.
The SBP circular said the US dollars so generated will either be brought back to Pakistan within three working days except export made on Thursday which they will be required to bring back within five days or remitted to their own foreign currency accounts for onward sale in the interbank market.
At present two exchange companies have been given permission to commence business, said the circular.