FE Circular No. 03 of 2021
The Presidents/Chief Executives of
All Authorized Dealers in Foreign Exchange
Five Days Forward purchase Contract with Exchange Companies against
Export of Permissible Foreign Currency Notes
Attention of all Authorized Dealers is invited to the instructions contained in Chapter (4) of the Foreign Exchange Manual in terms of which Authorized Dealers may enter into contracts for forward purchase or sale of foreign currencies subject to the regulations set out in this chapter.
- In order to facilitate Exchange Companies in managing exchange rate risks associated with realization of export proceeds against the export of permissible foreign currency notes, it has been decided that Authorized Dealers may enter into forward purchase transactions with Exchange Companies.
“Forward Purchase of foreign exchange in US Dollars against export of foreign currencies by Exchange Companies licensed by SBP”.
- Accordingly, a new Para ‘3A’ has been added in Chapter (4) ibid as under:
- Authorized Dealers may purchase forward the export proceeds in US Dollars received from abroad against export of permissible foreign currencies by Exchange Companies, subject to adherence of following terms and conditions:
- Forward purchase facility may be provided up to maximum five working days (including both transaction and settlement days).
- In case Authorized Dealers purchase forward the export proceeds in US Dollars against exports of permissible foreign currencies for less than five working days, Authorized Dealers may extend the maturity date provided that the total period of forward purchase, including the extended maturity 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 purchase 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 purchase is booked on or after the shipment date, maximum maturity date of forward purchase facility may be up to 5th working day of date of shipment.
- Forward purchase may be booked for full or partial value of export proceeds against export shipment.
- Forward purchase will be booked based on specific export shipment. For this, Authorized Dealers shall obtain copy of export documents from Exchange Companies. In case of advance booking, copy of confirmed deal ticket shall be obtained from Exchange Companies, while copy of other export documents shall be obtained 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 Authorized Dealer. In case of exchange loss, the same will be recoverable from Exchange Company by Authorized Dealer. To this effect, the Authorized Dealer should get consent/agreement signed by the concerned Exchange Company before entering into forward contract. The exchange gain shall be deposited in favor of the State Bank through RTGS Clearing Account No. 427517. In this respect, a consolidated statement regarding all such cases shall be submitted by Head/Principal Office of Authorized Dealers to the Director, Off-Site Supervision & Enforcement Department on monthly basis as per prescribed format (Appendix V-145) in excel file at email [email protected]
- In addition to above, Authorized Dealers may continue to purchase foreign exchange in Ready, Tom and Spot value dates, from Exchange Companies.”
- Related F.E. Circular No. 02 dated February 24, 2021 issued to Exchange Companies is attached herewith for ready reference.
Encl: As Above
(Zulfiqar Ali Khokhar)
Back to Circular Page