China, Turkey and Sri Lanka: Zardari floats idea to trade in local currencies

President Asif Ali Zardari on Friday told a gathering of businessmen and stockbrokers that the government is making arrangements with China, Turkey and Sri Lanka for settling trade between Pakistan and these countries in local currencies instead of the US dollar.
Addressing them at Bilawal House, the President dwelt on the country''s economic condition and also discussed the issues facing the capital market. President Zardari had floated the idea to trade in local currencies with China and other friendly countries and in this regard the government is putting structure for its implementation.
One of the participants suggested that the central bank needs to participate with other local banks in providing foreign exchange risk cover on long term investments. An allocation of $1.5 to 2.0 billion from the forex reserves against the fee of 5-6 percent would put a pressure on commercial banks who are charging at present in excess of 9 percent for such transactions.
This would ease the current tight liquidity persisting at present. The stockbrokers also suggested the government to sell State Enterprise Fund of NIT which has unrealised gain of Rs 14 billion to both resident and non-resident Pakistanis. The Fund was created to ease pressure on bourses in the wake of imposition of floor in 2008. It was further suggested that expatriate Pakistanis and foreign investors should enjoy equal status with regard to transfer of dividend and capital under the foreign exchange rule and tax law.