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FPCCI asks SBP to verify speculative transactions in dollars

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KARACHI: The Federation of Pakistan Chambers of Commerce and Industry (FPCCI) on Wednesday requested the State Bank of Pakistan (SBP) to control speculative transactions in dollars.

FPCCI Chairman Irfan Iqbal Sheikh in a meeting with a high-level SBP delegation visited the House of Federation, urged the central bank to use a political tool to check the speculative dollar trade in the over the past few weeks.

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The senior management of the SBP headed by Governor (A) Dr. Murtaza Syed and comprising, among others, Deputy Governors Dr. Inayat Hussain and Ms. Sima Kamil visited the FPCCI to discuss the current economic challenges and measures taken by the government and SBP.

FPCCI Chairman, Mr. Irfan Iqbal Sheikh, in his inaugural address, welcomed Dr. Syed and the senior management of the central bank for their visit to FPCCI.

Shedding light on the current trading scenario from the perspective of the FPCCI, he asked the Governor (A) to use the policy tools available at the disposal of the central bank to verify speculative transactions in the dollar over the past few years. weeks.

He observed that importers, manufacturers and industries were the beneficiaries due to the speculative nature and unavailability of dollars, the shortage of industrial raw materials and the resulting disruptions in production processes.

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Irfan argued that over the past few weeks, commercial banks have been offering LCs to importers at rates above interbank rates and called on the SBP to play its course-correcting role.

Dr. Murtaza Syed, Governor (A) of State Bank of Pakistan (SBP) announced the formation of a committee and appointment of an SBP Liaison Officer for close coordination with the FPCCI and prompt resolution of works council grievances. He made this announcement during his visit to the FPCCI at the invitation of their management.

The Governor (A) appreciated the business community for their endurance in the face of the challenges posed by international and national events and assured that SBP will give them full support by addressing their concerns as much as possible.

Governor (A) in his address informed the audience that the IMF staff level agreement is already in place and board level approval is expected in the third week of August as their board will reunite after their holidays in the first half of August. are finished.

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He added that SBP believes that the Rupee is currently undervalued and the Dollar has outperformed the FX market for several reasons; however, he hoped it would return to its true value in 2-3 months. He invited the business community to sit down with the SBP for a constructive consultation process and make suggestions on the current economic situation, foreign exchange and other related issues.

Dr. Syed also assured participants to review the technical requirements of prior approvals required by SBP commercial banks on the clearance of financial documents of shipments with HS codes beginning with 84 and 85, as these restrictions affected the importation of tractor parts. as well as other agricultural machinery.

A senior SBP official highlighted the support given to businesses in general and exporters in particular. SBP raised short-term export refinancing limits from Rs 432 billion to Rs 857 billion over the past four years, reflecting an increase of almost 100%. Similarly, outstanding SBP Long Term Fixed Rate Financing for Exporters (LTFF) has also witnessed an increase from Rs 209 billion to Rs 329 billion over the past three years, reflecting a growth of 57%. .

The Federation has acknowledged that the Temporary Economic Refinancing Facility (TERF) has made a massive contribution to boosting investment and stimulating the economy in the context of COVID-19. It won’t be out of place to mention that most business entities used TERF at rates well below the 5% maximum cap.

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The resounding success of TERF has indicated that it has succeeded in filling the void for long term investment in the country. An amount of Rs 436 billion had been approved under this facility for 628 companies.

FPCCI members raised some issues which SBP senior management answered comprehensively during the meeting and assured FPCCI members that central bank senior management was always available to listen to their issues and concerns. resolve first. On a query regarding the expiration of SBP’s renewable energy refinancing facility, the Federation was informed that the program has been extended until June 2024.

In the end, the President of the FPCCI submitted some suggestions for consideration by the SBP. The Governor (A) assured to examine the merits of these suggestions and to take a decision soon.