Forex firms allowed forward sale transaction with banks
The State Bank of Pakistan has allowed foreign exchange companies to enter into forward sale transaction with banks up to 5 working days against export proceeds in US dollars to help them manage rate risks.
"Authorised 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," the SBP said.
"Forward purchase facility may be provided up to maximum five working days (including both transaction and settlement days)."
The SBP said authorised 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) in case they purchase forward the export proceeds in US dollars against exports of permissible foreign currencies for less than five working 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.
The State Bank said 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.