Mohsin Siddiqui (Chief Reporter)

State Bank of Pakistan (SBP) has unveiled a mechanism for issuing the end-of-day rates for select foreign currencies. This initiative aims to ensure credibility in the process and provide a reliable reference for market participants.

The Exchange Companies Association of Pakistan (ECAP) will play a key role in this process by publishing daily open market exchange rates for major currencies, including USD dollar (USD), euro, pound sterling (GBP), Japanese yen (JPY), UAE dirham (AED), and Saudi riyal (SAR).

To implement this mechanism, the SBP has directed ECAP to calculate and publish end-of-day rates by December 26, 2023. The selection of contributing Exchange Companies (ECs) with at least 75 percent market share is crucial to achieving a representative end-of-day rate.

The contributing ECs, including Pakistan Currency Exchange Company, Ravi Exchange Company, Link International Exchange Company, and others, will submit buying and selling rates for the six major currencies to ECAP’s dedicated email daily between 4:00 PM and 4:30 PM.

In case a contributing EC fails to submit rates for five business days in a month, justification must be provided to the SBP via ECAP. The ECAP, responsible for data collection, calculation, and dissemination, will ensure the accuracy of the published end-of-day rates.

The simple average (buying and selling) rates for the six currencies will be disseminated to stakeholders by 5:00 PM. All Exchange Companies are mandated to use the mid-rate of the ECAP-published rates for book revaluation and regulatory exposure calculations. The ECAP holds the responsibility for maintaining the accuracy and reliability of the published data.