The State Bank of Pakistan (SBP) has extended permission for exchange companies to import US dollars until June 2025, in a move aimed at maintaining an adequate supply of cash USD in the open market. This decision comes as part of an ongoing effort to ensure stability and meet the demand for foreign currency within the country.
In a circular dated September 20, 2024, the SBP referred to its earlier instructions issued in two circular letters. The first, EPD Circular Letter No. 11, dated July 25, 2023, and the second, EPD Circular Letter No. 3, dated March 29, 2024, had allowed exchange companies to import up to 50% of the value of their export consignments in cash US dollars until June 30, 2024. The new circular extends this deadline to June 30, 2025, granting exchange companies additional time to import cash dollars under the same conditions.
The central bank emphasized that this extension is crucial to maintain liquidity in the open market, where demand for cash USD often fluctuates. By ensuring that exchange companies can continue importing US dollars, the SBP aims to prevent potential shortages and stabilize exchange rates, which can have a ripple effect on the overall economy.
Other than the new extended deadline, the SBP has stated that all terms and conditions from the original circular letters will remain unchanged. This means that exchange companies are still bound by the rules regarding the proportion of cash dollars they can import relative to their export consignments.
The move is seen as a proactive step by the central bank to tackle ongoing challenges related to foreign currency availability. Over the past year, the demand for US dollars has surged due to various economic factors, including higher import bills, debt payments, and a stronger focus on foreign exchange reserves. By allowing exchange companies to continue importing dollars, the SBP hopes to provide a steady flow of cash currency, alleviating pressure in the local markets.
This decision also ties into Pakistan’s broader economic management strategies. The country’s financial system has been under strain from fluctuating exchange rates and foreign reserves challenges. With the SBP’s extension of the import deadline, there is a concerted effort to maintain market stability, particularly in the face of unpredictable global economic shifts and the pressure on Pakistan’s currency.
While this measure provides some relief for exchange companies and their customers, it also highlights the central role that the SBP plays in balancing foreign currency supply and demand. Exchange companies will now have until mid-2025 to continue importing cash US dollars, which could help stabilize exchange rates and ease the challenges businesses and individuals face when accessing foreign currency.
As the June 2025 deadline approaches, it remains to be seen whether further measures will be taken to address foreign exchange supply and demand dynamics, especially as Pakistan continues to navigate complex economic conditions. In the meantime, the SBP’s extension provides immediate relief and reassurance to exchange companies and the broader market, allowing for a more stable and predictable foreign currency environment.
Moving forward, the SBP’s decision to maintain consistency in the conditions for dollar imports suggests that the central bank is focusing on sustaining liquidity without introducing additional changes that could disrupt market operations. The extension of the deadline gives exchange companies a clear framework for managing their foreign exchange operations for the coming year, ensuring that they can continue to meet the market demand for US dollars while adhering to regulatory guidelines.
This extension is part of the SBP’s broader approach to managing the foreign exchange market and ensuring that exchange companies can operate smoothly in a challenging economic environment. By allowing continued dollar imports, the central bank is helping to create a more stable financial environment for both businesses and consumers across the country.