The Chief Executives of all
Five Days Forward Sale Facility against Export of Permissible Foreign Currency Notes
Attention of all Exchange Companies is invited to the instructions contained in Para (9)(i)(e), Chapter (3) of the Exchange Companies Manual whereby Exchange Companies are allowed to sell foreign exchange in Ready, Tom and Spot value dates, with banks as counterparty (Interbank Market).
2. In order to facilitate Exchange Companies in managing exchange rate risks associated with realization of export proceeds against export of permissible foreign currency notes, it has been decided that Exchange Companies may enter into forward sale transaction with banks up to 5 working days against export proceeds in US Dollars.
3. Accordingly, a new sub-para (e) (i) at Para (9) of Chapter (3) ibid has been added as under:
“Exchange Companies may sell forward the export proceeds received from abroad in US Dollars to banks against the export of permissible foreign currencies made on consignment basis through cargo/security companies subject to adherence of following terms and conditions:
- Forward sale facility may be availed up to maximum five working days (including both transaction and settlement days).
- In case Exchange Companies sell forward the export proceeds for less than five working days, forward sale period may be extended provided that the total period of forward sale, including the extended period, does not exceed five working days (including both transaction and settlement days). However, such extensions will be made by closing out the original contract and booking of a fresh contract at the new rate.
- Forward sale may be booked before or after the export shipment.
- Exchange Companies are required to bring export proceeds within 5 working days from the date of shipment. In case forward sale is booked on or after the shipment date, maximum maturity date of forward sale facility may be up to 5th working day of shipment date.
- Forward sale may be booked for full or partial value of export proceeds against export shipment.
- Forward sale will be booked based on specific export shipment. For this, Exchange Company shall provide copy of export documents including deal ticket confirmed with foreign buyer to the bank. In case of advance booking, Exchange Companies will submit copy of deal ticket confirmed with foreign buyer to the bank, while copy of other export documents will be submitted subsequent to the shipment.
- No substitution is allowed for settlement of export proceeds.
- Forward contracts, which are not taken up, may be closed out on the date of maturity at prevailing spot rate. Exchange gain, if any, will not be passed on to the Exchange Company, rather the same will be deposited in favor of State Bank of Pakistan by the bank. To this effect, the Exchange Companies are required to provide their consent/agreement in writing as prescribed by the bank before entering into forward contract.
4. Further, sub-para (i) of Para (4) of Chapter (5) ibid stands revised as under:
“Exchange Companies exporting permissible foreign currencies shall repatriate equivalent US Dollars in their foreign currency accounts maintained with banks in Pakistan. Such US Dollars against exports must be credited in foreign currency accounts within five working days from the date of export of foreign currencies”.
5. F.E. Circular No. 03 dated February 24, 2021 issued to Authorized Dealers is attached herewith for ready reference.
6. All other instructions relating to the subject shall remain unchanged.
Encl: As Above