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Pakistan’s central bank tightens currency movement
July 09, 2018
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ISLAMABAD: The State Bank of Pakistan (SBP) has taken stringent measures to tighten currency movement within the country amid depreciation of the national currency following the grey-listing of Pakistan by the Financial Action Task Force (FATF).

The central bank issued a detailed set of instructions on Saturday to all the money exchange companies, instructing them to help the bank keep a strict vigilance over currency movements, reports Xinhua news agency.

According to the instructions, the money exchange companies will have to properly document and record the purpose of the currency movement after necessary authorization in its system on real time basis by its head office.

The central bank has also decided to allocate working capital to each outlet of the exchange companies for carrying out transactions, keeping in view the business needs of the head office of the respective exchange company.

This would help the State Bank to keep a check on the movement of the Pakistani rupee and foreign currencies within the company’s authorised network.

Pakistan was placed on the grey-list on June 28 by by the FATF, an inter-governmental body which combats money laundering and terror financing among other things, for failing to curb terror financing on its soil.

The decision to put Pakistan on the “grey list” was taken in February but then the country was given relief till June to combat the issue.

Pakistan had been included in the list from 2012 to 2015. Meanwhile, Pakistan’s next government, to be chosen in a July 25 election, faces growing fears of a balance of payments crisis with speculation it will have to seek its second IMF bailout in five years, analysts say.

The central bank is running down its foreign reserves and devaluing the currency in a bid to bridge a yawning trade deficit, and the winners of the July 25 election will have “limited time” to act, Fitch ratings agency said on July 2.

Together, the economic challenges are “horrendous”, said Ashfaque Hasan Khan, an analyst and former financial advisor to the Pakistan government.

“The most important (challenge) will be how to protect Pakistan’s balance of payments, how to build Pakistan’s foreign exchange reserves and how to fix its fiscal position,” he told AFP.

Plagued for years by Islamist militancy, Pakistan — a rapidly growing country of some 207 million people — has been battling to get its shaky economy back on track and end a years-long chronic energy crisis that has crippled industry.

Agencies

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