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STATE BANK OF PAKISTAN
F.E. Circular No. 24
December 31, 2002
The Head
Offices/Principal Offices of all
Authorized Dealers In Foreign Exchange
Dear
Sirs,
(i) Discounting of Sight Export Bills
(ii)
Third Currency Exposure Coverage for Imports
(iii) Forward
Quotations for Less than One Month
Please refer to the instructions contained in para 10, Chapter IV of FE
Manual-2002 which states that in case an exporter books forward cover and
presents thereagainst an export bill drawn on usance basis for discounting,
the Authorised Dealer may treat discounting of the usance bill as delivery
against the forward contract provided such bills are presented for
discounting during the option delivery period only. In all other cases the
foreign currency receipts in respect of discounted bills will not be
considered as delivery against forward contract and the Authorised Dealer
will discount the bill at its current applicable rate and close out the contract
on maturity.
2. It has now been decided to include sight export bills in the above
facility. Accordingly, Chapter IV paragraph 10, of Foreign Exchange Manual
(8th Edition, 2002) is amended to read as under:-
“In case an exporter books forward cover and presents thereagainst an
export bill for discounting, the Authorised Dealer may treat discounting of
the usance or sight bill as delivery against the forward contract provided
such bills are presented for discounting during the option delivery period
only. In all other cases the foreign currency receipts in respect of
discounted bills will not be considered as delivery against forward contract
and the Authorised Dealer will discount the bill at its current applicable
rate and close out the contract on maturity.”
3. Further, in terms of Chapter IV para 3(ii), exporters have the option
to cover their third currency exposure in case goods exported are invoiced
in a convertible currency. In order to deepen the forex market, it has been
decided to allow such facilities to importers also. Accordingly, para 3(ii)
may be amended to read as follows:
“In
the case of export of goods to be invoiced in any convertible currency other
than U.S. Dollar, it is permissible for the Authorised Dealers to buy
forward the concerned currency in terms of US Dollar, if the exporter wishes
to cover only such risk and to carry dollar versus rupee risk himself. On
realization of such proceeds the equivalent U. S. Dollar amount at the
booked rate will not be delivered but converted at the spot rate and the
rupee equivalent will be paid to the exporter. In case, if exporter does not
want to carry Dollar versus Rupee risk himself and wants to cover the same
in the forward market, the same would also be permissible. The Authorised
Dealers will conduct such transactions within their approved ‘Exchange
Exposure' limits.”
Further, following is
added as sub-para (ii) after Para 4(i):
“In
the case of import of goods invoiced in any convertible currency other than U. S. Dollar, it is permissible for Authorised Dealers to sell forward the concerned currency in terms of US Dollar, if the
importer wishes to cover only such risk and to carry dollar versus rupee
risk himself. On the date of such payment, the equivalent US Dollars amount
at the booked
rate will not be claimed but converted at the spot rate and the rupee
equivalent would be claimed from the importer. In case, if importer does not
want to carry Dollar versus Rupee risk himself and wants to cover the same
in the forward market, the same would also be permissible. The Authorised
Dealers will conduct such transactions within their approved ‘Exchange
Exposure’ limits.”
The existing sub-para
(ii) may be renumbered as (iii)
4. In terms of Para 2 of Chapter IV of FE Manual (8th
Edition-2002), no forward transactions may be made for a tenor of less than
one month. It has now been decided to remove this restriction. Accordingly,
Para 2, Chapter IV of FE Manual would be read as under:
“Forward Quotations.
Authorised Dealers may provide forward cover for exports, imports, foreign
private loans covered under paragraph 8, Chapter XIX (on roll-over basis)
and repatriable foreign currency loans mentioned in paragraph 15, Chapter
XIX of the Manual (excluding loans obtained by foreign contractors and
branches of foreign companies) for any duration, subject to any restriction
mentioned in subsequent paragraphs, in accordance with the conditions
prevailing in the market.”
Please bring the above
changes to the notice of your constituents.
Yours faithfully,
(M. R. Mehkari)
Director
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