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KARACHI: In order to ensure transparency and credibility to the process of compiling open market exchange rate, the State Bank of Pakistan (SBP) has announced the mechanism to issue/publish end of the day open market exchange rates of select foreign currencies.

End of the day daily open market exchange rates published by Exchange Companies Association of Pakistan (ECAP) for six major currencies, ie, USD dollar (USD), euro, pound sterling (GBP), Japanese yen (JPY), UAE dirham (AED) and Saudi riyal (SAR).

In order to ensure transparency, the SBP has described a mechanism for compiling open market exchange rate. Accordingly ECAP has been advised to implement this mechanism to calculate and publish end of day open market exchange rates by December 26, 2023.

SBP keeps key policy rate unchanged at 22%

Exchange Companies {ECs) having at least 75 percent market share will be selected to provide exchange rates of six major currencies {USD, EUR, GBP, JPV, AED and SAR) to ECAP on daily basis.

A minimum of eight (8) ECs must contribute to make a representative end of day rate. The ECAP will ensure that a minimum number of contributors are available for providing the rate.

In case 75 percent market share is covered by less than eight (8) ECs, the next EC(s) in terms of market share will be selected to ensure that the number of contributors are not less than eight (8).

The contributing ECs will be selected by SBP and advised to ECAP based on their business volumes. The list of such ECs for the next calendar year has also been issued by the SBP.

This included Pakistan Currency Exchange Company, Ravi Exchange Company, Link International Exchange Company, Dollar East Exchange Company, Wall Street Exchange Company, Habib Qatar International Exchange Pakistan, Sadiq Exchange Company, ZeeQue Exchange Company,

Paragon exchange Company, HBL Currency Exchange, AA Exchange Company and Sky Exchange Company,

As per mechanism, the contributing ECs will submit the rates (buying and selling) for six major currencies that include USD, EUR, GBP, JPV, AED and SAR prevailing in the market to ECAP’s dedicated email.

The contribution time will be from 4:00PM till 4:30PM.

The contributing ECs will be required to quote the closing levels to ECAP; and not averages for the day or stale rates.

The contributing ECs will designate a focal person(s) to provide exchange rates to ECAP.

Any contributing EC failing to submit rates for five (5) Business Days during any calendar month would be required to justify the reason of non-contribution to SBP via ECAP.

In case of suspension or cancelation of license of any contributing EC, SBP may nominate a replacement as per the market share.

The ECAP will calculate the simple average (buying and selling) rate for each currency.

After compilation of data, the average {buying and selling) rates of aforesaid six (6) currencies will be disseminated by the ECAP to stakeholders by 5:00PM.

The ECAP will nominate/assign the responsibility of data collection, calculation and dissemination to its office bearers. No other EC will disseminate end of day exchange rates in the name of the ECAP.

All ECs will use the mid-rate of the ECAP published end of day rates for revaluation of their books including calculation of exposure for regulatory purpose. The ECAP will be responsible for ensuring the accuracy of the published data.

Copyright Business Recorder, 2023

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