The State Bank of Pakistan (SBP) has made a positive decision by allowing authorized dealers to purchase US dollars from the interbank market for settling card-based cross-border transactions using International Payment Schemes (IPS) like Visa and Mastercard. This move has been welcomed by stakeholders.
Previously, authorized dealers could only purchase US dollars for such transactions from exchange companies. With the new notification, authorized dealers can now directly purchase US dollars from the interbank market, reducing the gap between interbank and open market exchange rates.
The notification came into effect immediately and will remain in place until July 31, 2023, according to the SBP. This decision aims to address the increasing difference between the official and informal markets’ rates, which has led to transactions outside the formal banking system and the use of unofficial channels like hawala for money transfers.
The open market has a high demand for US dollars due to the requirements of travelers during the summer vacation and Haj, as well as for businesses involved in imports funded through the open market.
Zafar Paracha, the General Secretary of the Exchange Companies Association of Pakistan (Ecap), praised the SBP’s decision, stating that it would reduce the open market exchange rate by around Rs20-25 per USD over time. He also highlighted that it would help bridge the gap between interbank and open markets and enhance remittance inflows.