KARACHI (February 04 2010): To monitor dollar transactions and curb speculation, the State Bank of Pakistan (SBP) has directed the exchange companies to submit reports of all foreign exchange sale, purchase and outward remittance transactions on daily basis. Sources told Business Recorder on Wednesday that the central bank has decided to initiate strict monitoring of exchange companies with a view to stabilising the rupee and to stop speculation, besides smuggling of dollars to Afghanistan.

Earlier, as per FE Circular No 02 dated April 29, 2008, exchange companies were required to report only transactions of $5000 or above on daily basis to the State Bank. However, the SBP has now decided to get reports of all transactions of exchange companies on daily basis due to rising speculation in dollar and continuous depreciation of the rupee against dollar for past one month.

"Now it has been decided that exchange companies would report, on daily basis, all transactions, regardless of amount, made by them on account of sales and purchased over the counter, besides daily reporting of outward remittances", a circular issued by the central bank to the exchange companies said.

As per directives of SBP, the exchange companies are also required to submit daily information about their contract-wise sale and purchase transactions with other exchange companies (including B category) and authorised dealers. The central bank has also asked the exchange companies that daily statement of FYC cash sales/purchase should reach SBP the same day, latest by 7 pm, as per proper procedure described by the State Bank.

SBP has warned the exchange companies that any delay in reporting will be dealt strictly under related rules and regulations. In another move, the SBP has also imposed condition of producing CNIC and submitting a copy at the time of buying and selling of even one dollar at any exchange company, and now exchange companies would report to SBP with CNIC numbers. Sources said that SBP has taken these steps after continued deprecation of rupee against dollar in the wake of the rising smuggling of dollars to the Afghanistan.

"The smuggling is being made through Chaman and Peshawar border to Afghanistan nowadays, which has created some shortage of dollars in the domestic market", they said. However, they said, steps taken by the central bank would result in negative impact on the currency market, and people would move to black market. Despite SBP's actions, the rupee is being depreciated against dollar, and on Wednesday it was being traded at Rs 86.60 per dollar in the open market, they said.

Copyright Business Recorder, 2010