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CHAPTER
V
FOREIGN CURRENCY ACCOUNTS OF AUTHORISED DEALERS AND SALE OF FOREIGN CURRENCIES
Introduction.
This chapter sets out the regulations governing purchase and sale of foreign currencies by
Authorised Dealers in the inter-bank market in Pakistan as well as their purchase from and
sale to the State Bank and overseas branches and correspondents.
2. Accounts in Foreign Currencies.
Authorised Dealers are permitted to open and maintain accounts in all fully convertible
currencies with their branches and correspondents abroad, subject to the condition that
opening of every new account should be reported to the Director, Exchange Policy
Department by a letter giving the name and address of the foreign branch or correspondent
with whom the account has been opened and the currency of the account.
3. Foreign Currency held at the disposal of
the State Bank.
Foreign currency balances of Authorised Dealers, whether operated by their Head/Principal
Offices or branch offices, shall at all times be held at the disposal of the State Bank
which may give such directions for their disposal as it may consider necessary and
expedient. The State Bank may direct Authorised Dealers at any time to sell either ready
or for forward delivery, foreign currency or currencies held by them to the State Bank or
to such other person or persons as the State Bank may direct.
4. Exposure Limits and Nostro Limits.
i) The State Bank fixes from time to time
limits for foreign exchange exposure on an overall basis for all currencies for each bank
authorised to deal in foreign exchange. These limits are intended to cover the positions
of all the branches in Pakistan of banks incorporated abroad, and all the branches,
including overseas branches, if any, of banks incorporated in Pakistan. Head/ Principal
Offices of Authorised Dealers should ensure on day to day basis that these limits are not
exceeded. It is advisable that Authorised Dealers maintain square or near square exposure.
ii) There are no Nostro Limits for balances
held abroad.
5. Calculation of Exposure Limits.
The guidelines for calculating the exposure
appear as a Memorandum at the end of Appendix III.
6. Exchange Exposure Position.
Authorised Dealers are required to report to the Exchange & Debt Management
Department, State Bank of Pakistan, all the foreign exchange transactions (ready, forward,
take-ups, cancellation and adjusting entries etc.) entered into by them with customers as
well as with other Authorised Dealers that create foreign exchange exposure in any
currency, transacted during a day on floppy diskettes using the software installed by SBP on each
bank's computers.
Floppy diskettes alongwith following reports generated by the software, duly signed by an
Authorised Officer, are required to be submitted on daily basis to the Exchange & Debt
Management Department, State Bank of Pakistan by close of office hours:
a) Deals
b) Take-ups
c) Cancelled
deals'
d) Adjusting
entries
e) Closing
balance
7. Purchase and sale of Foreign Currencies.
Authorised Dealers may freely purchase foreign currencies, as there are no restrictions on
inward remittances. All sales of foreign currencies to customers must, however, be in
cover of genuine transactions approved by the State Bank or by the Authorised Dealers
under powers delegated to them.
8. Inter-bank transactions.
Authorised Dealers may freely buy and sell foreign currencies from and to other Authorised
Dealers in Pakistan provided they remain within their permissible exposure limit.
9. Purchase of U.S. Dollars from and their sale to the
Authorised Dealers by the State Bank.
The State Bank may, at its discretion, buy U.S.
dollars from and sell to the Authorised Dealers both ready and forward.
10. Purchase and sale of Foreign Currency
from and to Banks’ Overseas Branches and Correspondents.
Authorised Dealers may freely purchase both ready and forward one
foreign currency against another from their overseas branches and correspondents in order
to cover their positions. Purchase of foreign currencies from and their sale to banks'
overseas branches and correspondents against Rupee may be made in accordance with the
provisions of Chapter VII.
