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All Authorized Dealers
in Foreign Exchange,
Dear Sirs,
FORWARD RATES AND MODUS OPERANDI FOR FORWARD TRANSACTIONS
In order to provide support to the market under the new regime of two tier Exchange Rate Mechanism advised vide our F.E. Circular No. 38 dated : July 21, 1998 SBP has decided to open forward foreign exchange window for authorised dealers so that they can freely accommodate their clients in providing forward sale/purchase facility.
2. Effective July 22, 1998 following exchange rates shall apply for transactions falling under Tier (1) i.e. the OFFICIAL EXCHANGE RATE category :-
State Bank of Pakistan Rates for Authorised Dealers per USD
| Buying Rates | Selling Rates |
|---|---|
| SPOT 46.00 | 46.23 |
| 1 Month 46.35 | 46.62 |
| 2 Months 46.69 | 47.00 |
| 3 Months 47.04 | 47.39 |
| 4 Months 47.38 | 47.77 |
| 5 Months 47.73 | 48.16 |
| 6 Months | 48.54 |
Authorised Dealers Rates for Customers Per USD
| Buying Rates | Selling Rates |
|---|---|
| SPOT 45.95 | 46.28 |
| 1 Month 46.30 | 46.67 |
| 2 Months 46.64 | 47.05 |
| 3 Months 46.99 | 47.44 |
| 4 Months 47.33 | 47.82 |
| 5 Months 47.68 | 48.21 |
| 6 Months 48.02 | 48.59 |
PROCEDURE FOR DELIVERY
FORWARD SALE / PURCHASE RATES
SBP as well as the Authorised Dealers (Ads) forward contracts shall specifically mention period of delivery, including the option period. In case maturities of forward contracts fall on non-working days, the maturity of the contract (both sale and purchase) would fall on the next business day.
All SBP forward purchase contracts with Ads will have a last-month option. However contracts between ADs and their clients can have longer option periods or can be for fixed delivery. All forward contracts shall show the price, and delivery period during which contract can be taken up by the relevant purchaser. For instance, an AD approaches the SBP on July 28, 1998 to sell 6 month forward with last month optional delivery. The SBP will buy USD from the AD at the 5-month forward buying rate i.e. @ 47.73. The delivery of US$ will be between December 28, 1998 and January 28, 1999.
All SBP forward contracts with ADs will have a last-month option. However contracts between ADs and their clients can have longer option periods or can be for fixed delivery. All forward contracts shall show the price, and delivery period during which contract can be taken up by the relevant purchaser. For instance, and AD approaches the SBP on July 28, 1998 to buy USD 6 month forward with last month optional delivery. The SBP will sell him USD @ 48.54 and the delivery of US$ will be between December 28, 1998 and January 28, 1999.
In case of Usance export bills discounted by AD, the AD will enter into a forward sale contract with SBP for the respective tenor. For instance, AD discounts 60 days usance bills for USD 100,000/= on July 28, 1998. Since ADs are required to surrender 50% of the export proceeds to SBP at the Official Exchange Rate, they will enter into a 3 month forward Contract with SBP with last month optional. The rate applicable will be the 2-month SBP Buying rate, i.e. Rs. 46.69 per USD for US$ 50,000. Upon realization of proceeds of the bill they will deliver USD 50,000/= to SBP and obtain PKR from the respective office where they registered the forward Contract.
In case of sight documents negotiated by AD, 50% of the amount of negotiation shall be sold in ready by the AD to SBP at SBP official buying rate, i.e. 46.00. There will be no further surrender upon receipt of the proceeds of the Bill.
SBP undertakes transactions in U.S. Dollar only. Therefore, all transactions concluded by ADs in currencies other than the U.S. Dollar, will be converted by the AD into the equivalent US Dollar amounts, for onward sale / purchase to / from the SBP at the relevant conversion rate as determined by them.