The State Bank of Pakistan (SBP) announced on Wednesday that it has tightened the monitoring of foreign exchange transactions of national foreign exchange companies (CEs) and banks after massive volatility in the rupee-dollar parity.
He added that a meeting of Exchange Company Association of Pakistan (ECAP) has also been convened on August 4, 2022.
“Given the recent volatility of the exchange rate and the difference between the interbank rate and the rate offered by exchange companies (CE) and banks to their customers, the SBP has reinforced the monitoring of the exchange operations of the EC and banks,” he said in a statement.
The rupee had its worst month in over 50 years in July, losing 14.5% against the US dollar. However, it has been on a growing frenzy over the past four sessions with Wednesday’s increase in its biggest overnight appreciation in absolute terms.
The rupee closes at 228.8 after the strongest daily appreciation against the US dollar
Meanwhile, the SBP said it has also started inspections of a number of foreign exchange companies and banks from Monday (August 1, 2022).
The central bank added that on Tuesday August 2, 2022, it suspended the operations of four branches of two ECs (Galaxy Exchange Co and Al-Hameed International Money Exchange Co) for violating SBP regulations.
OICCI and SBP discuss the economic situation
“The SBP has also imposed monetary sanctions on some CEs in the recent past,” he said. “Additionally, due to violations of SBP instructions, 13 franchise arrangements by six different ECs were terminated in the recent past.”
He added that he has also started conducting mystery shopping exercises across Pakistan to investigate apprehensions that some CEs are not selling foreign currency to their clients.
“If necessary, the SBP would increase its enforcement actions against ECs and banks in light of the findings of ongoing inspections and mystery shopping,” the central bank said.
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