Wed, Jul 9 09:23 AM
KARACHI (Reuters) - Pakistan's central bank said late on Tuesday it was tightening up regulations on foreign exchange transactions in measures analysts said would provide some protection to the rupee which has fallen 18.3 percent this year.
Exchange companies would need approval for transactions amounting to or more than $50,000 on the sale of outward remittances or foreign currencies for individuals, the State Bank of Pakistan said in a statement.
However, this would not apply to the sale of foreign currency to banks or exchange companies.
It also decided to suspend temporarily forward booking for all imports.
"Authorised dealers are, therefore, advised not to sell to their customers, foreign exchange on forward basis against imports," the central bank said.
However, deals already made will be honoured according to the terms and conditions of their contracts.
The central bank would also provide foreign exchange to authorised dealers for all imports of furnace oil.
The rupee slumped 2.6 percent on Tuesday to close at a record low of 72.85/90 to the dollar in a market worried about high inflation, burgeoning deficits and security.
The rupee has fallen 18.3 percent against the dollar this year as annual inflation has accelerated to a three-decade high above 19 percent and fiscal and current account deficits have widened, due largely to a soaring oil import bill.
One analyst said he expected the rupee to firm to about 70 or 71 to the dollar on Wednesday although he said the central bank was only buying time with the new measures.
"It's a short-term band-aid for a gaping wound," said the analyst, who declined to be identified.
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