Pakistan suspends authorization of exchange companies for violating rules amid forex crunch

ISLAMABAD: Pakistan’s central bank has suspended the authorization of multiple currency exchange companies over regulatory violations, it said on Saturday, amid a foreign exchange crunch in the South Asian country. 

The companies whose authorization has been suspended include International Exchange Company, World Wide Exchange Company, World Exchange Company, Universal Exchange Company and United Exchange Company. 

The development comes as authorities in the South Asian country continue to crack down on currency hoarders, smugglers and money exchanges involved in regulatory violations to stabilize the country’s foreign reserves. 

“All the aforementioned Exchange Companies – B Category, their head offices and all branches have been debarred from undertaking any kind of business activity during the suspension period,” the State Bank of Pakistan (SBP) said in a statement. 

Pakistan is trying to navigate a tricky path to economic recovery under a caretaker government in the wake of a $3-billion International Monetary Fund (IMF) bailout program, approved in July, that helped the South Asian country avert a sovereign debt default. 

The central bank said on Friday it had met an end-September deadline for a forward book target of $4.2 billion agreed with the IMF, and was comfortably placed to meet others on net international reserves and net domestic assets. 

Since January 2023, the bank’s foreign exchange reserves have improved from a low of $3.1 billion to $7.6 billion by the end of September, according to the SBP. The build-up of reserves was largely supported by non-debt creating inflows amid favorable market conditions. 

“At the same time, SBP’s forward foreign exchange liabilities have declined and the forward book target of $4.2 billion for end-September 2023 agreed with the IMF has already been met by a wide margin,” the central bank added.