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KARACHI: The State Bank of Pakistan (SBP) has refused to change its stance over requiring identification documents for all buying and selling transactions of foreign currency in amounts of $500 and above.
The requirement had been announced by the regulator on Monday, prompting outrage from exchange companies who argued that illegal trading of dollars and other currencies would flourish because of this requirement.
On Wednesday, a delegation from the exchange companies met with State Bank officials in a bid to change the decision. However, they could not convince the SBP. “State Bank’s argument was stronger than us.
The country has fears that it may be put in the grey list in June. We assured all support,” said Malik Bostan, President Forex Association of Pakistan who represented the exchange companies.
Bostan was trying to convince the State Bank to keep the requirement of identification only for buying transactions of $2,500 and above. For selling transactions, they were fine with the new requirement.
The impact of SBP’s decision was immediately felt in the open market and the dollar rose to Rs118.40; an increase of 40 to 50 paisa.
“We usually collect third currencies equivalent to $2-3 million per day which suddenly dropped to just $1m on Wednesday,” said Bostan adding that these currencies are taken to Dubai in cash form where they are exchanged for dollars, which are then remitted back into Pakistan via banking channels.
He said the shortage of dollars was evident in the market and the price was going up. The biggest fear for the exchange companies was the growth of illegal trading of currencies in the market.