Govt to further limit forex purchase

ISLAMABAD: In a major development, the federal government and central bank, on Monday, decided to limit the amount of foreign currency purchased per person and capped the outflow of remittances to $50,000 annually, aimed at reducing the speculations-driven high dollar value in the open market. It has also been decided that the Federal Investigation Agency (FIA) will be used against those foreign currency dealers involved in speculative currency trading, according to the decisions taken in a meeting between Finance Minister Ishaq Dar and the Governor State Bank of Pakistan (SBP), Jameel Ahmad.
A senior government functionary told the Express Tribune that the per day currency purchase and outward remittance limit has also been cut by half, to $5,000 with a maximum annual cap at $50,000.
The central bank will be issuing a notification shortly to amend the existing exchange companies’ regulations and give effect to these decisions. Finance Minister Ishaq Dar had asked for the meeting with the governor of the central bank after the rupee-dollar value remained over Rs230 to a dollar in the open market. The open market rate was also providing an opportunity to commercial banks to keep the interbank rate in the range of Rs222, far higher than the real inflation adjusted value of the rupee, estimated to be below Rs200 to a dollar.
The official said, during the meeting, SBP Governor Jameel Ahmad also agreed with Dar about the real value of the rupee being below Rs200 to a dollar. The governor, however, was not available for comments.
The dollar, at the interbank, fell by 26 paisas and closed at Rs221.66. The rupee was traded at Rs236 to Rs238 to a dollar in Peshawar, a city bordering Afghanistan and a source of currency smuggling. Last week, Dar sent the Prime Minister’s Special Assistant on Revenue, Tariq Pasha, to Peshawar to find out what was behind the high value of the dollar in the city.
The constant downfall of the local currency also eroded the gains that could be made from the reduction of global crude oil prices, forcing people to pay the highest rates in the Pakistan’s history.
The senior functionary told the Express Tribune that, during the meeting, it was decided that the maximum limit per person, per day to buy foreign currency, in the form of cash or outward remittances from all exchange companies, will be reduced from $10,000 (or its equivalent in other foreign currencies) to $5,000.
Also, the maximum limit per person per calendar year to buy foreign currency, in the form of cash or outward remittances, will also be reduced from $100,000 (or its equivalent in other foreign currencies) to $50,000.
These decisions may help ease pressure on the country’s foreign exchange reserves, currently standing at $8.9 billion, despite bringing foreign trade to a halt, except the import of essential items.