PKR forward maturities to be settled on SOD basis

Pak Rupees (PKR) forward maturities would be settled on Start-of-Day (SOD) basis with effect from Dec 23, 2019, a circular issued by the State Bank of Pakistan (SBP) said.

As per existing practice, the PKR maturities in respect of forward leg of FX interbank contracts (PKR forward maturities) are settled on End-of-Day (EOD) basis. Apart from not being in line with international best practice, the EOD basis also carries associated risk of unjustified intraday float.

Therefore, now the State Bank has decided that PKR forward maturities would be settled on Start-of-Day (SOD) basis effective December 23, 2019 and onwards.

SBP has directed the banks to ensure sufficient liquidity in their respective PKR accounts maintained with SBPBSC-Karachi Office on the settlement date of PKR forward maturities in order to avoid intraday liquidity shortages.