KARACHI — Pakistan’s central bank has rolled out a new policy to finalise open market exchange rates, which has been announced at the end of each working day.
The new mechanism from the State Bank of Pakistan aimed to ensure transparency and credibility in the process of announcing the open market exchange rate of selected foreign currencies.
With the latest announcement, the Exchange Companies Association of Pakistan will now publish daily end-of-day open market exchange rates for major currencies, including US dollar, euro, pound sterling, Japanese yen, UAE dirham, and Saudi riyal.
For the unversed, Exchange Companies hold over 75pc market share, and they provide exchange rates of 6 major currencies to ECAP on a daily basis.
SBP said at least eight Exchange Companies should contribute to making representative end-of-day rate. ECAP will ensure that a minimum number of contributors are available for providing the rate.
It said if 75pc market share is covered by less than eight ECs, the next exchange company in terms of market share will be selected to ensure that the number of contributors are not less than eight.
It named 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.
The central bank has set contribution time from 4:00PM till 4:30PM. ECs will be required to quote the closing levels to ECAP; and not averages for the day or stale rates.
It also mentioned that in case of suspension or cancelation of license of any contributing EC, State Bank may pick a replacement as per market share. ECAP will also calculate the simple average buying and selling rate for each currency.
Exchange Companies Association of Pakistan will use its office bearers for data collection, calculation and dissemination. The companies will use mid-rate of ECAP published end of day rates for revaluation of their books including calculation of exposure for regulatory purpose.
