AAll
Authorized Dealers
In Foreign Exchange,
Dear
Sirs,
FORWARD
COVER
As
Authorized Dealers are aware, at present State Bank of Pakistan
undertakes forward buying / selling of U.S. Dollars from
/ to time for 6 / 12 months in connection with the transactions
undertaken by them (Authorized Dealers) relating to exports
and specified imports. It is proposed to discontinue the
role of the State Bank and leave the short-term forward
cover market to the Authorized Dealers. Initially, the Foreign
Exchange Rates Committee will quote the forward buying and
selling rates on the basis of premium / discount determined
by it. After the banks gain adequate experience in the field,
they may be allowed to quote their own rates. In the initial
stage (s), the State Bank would be prepared to provide counter
cover to Authorized Dealers for that portion of the transactions,
which have not been covered in the inter-bank market, and
as a consequence, remain open, at the same rate of premium
at which forward covers are provided by the Authorized Dealers
to the Customers.
2.
In this connection, we enclose revised
Chapter IV of the Foreign Exchange Manual (7th
Edition – 1992) – Foreign Exchange Facilities
– replacing the existing paragraph 1 to 12, 14 to 16
and 20 to 24 of the Chapter. The existing para 13, 17, 18
and 19 of this Chapter may be renumbered as 12,13,14 and
15 respectively.
3.
Attention of Authorized Dealers is also invited to para
9 Chapter
V of the Foreign Exchange Manual (7th Edition
– 1992). The aforesaid para may please be substituted
by the following:-
"9.
Authorized Dealers may freely buy and sell foreign
currencies both ready and forward from and to Authorized
Dealers in Pakistan provided such purchases / sales
are backed by permissible transactions with their
customers."