KARACHI , June 1, 2023: In a bid to lessen pressure on the rupee in open market, the central bank on Wednesday allowed authorised dealer [banks] to purchase US dollars from interbank for settlement of card-based cross-border truncations with the International Payment Schemes (IPSs).
Earlier, the authorised dealers were allowed to purchase the greenback from any exchange company for card-based cross-border truncations with IPS including Visa and MasterCard.
The move is expected to help reduce the pressure on the exchange companies and the local currency is likely to appreciate against the greenback.
On Wednesday, the State Bank of Pakistan (SBP) in a notification said the decision was made “in view of representations received from stakeholders”, which was applicable with immediate effect and would remain in place till July 31, 2023.
Experts and currency dealers have welcomed the move, citing a huge demand of greenback in the open currency market. It is not just travelers, students and pilgrims who were purchasing US dollar from the exchange companies but also the banks had to do the same for the card-based cross-border transactions with IPSs.
Commenting on the move, Zafar Paracha of Exchange Companies Association of Pakistan (ECAP) said the demand for the US dollar would increase in the interbank and decrease in the open market. It was going to reduce the open market exchange rate by up to Rs25.
The rupee has reached the Rs313-316 range in recent days at a time when the interbank rate stands at Rs285.47, translating into a difference of over Rs27.
It means the huge difference between the official and open market encourages transactions outside the formal banking system – blacking marketing and use of illegal means like hawala and hundi, especially by the expats sending money back home.