Govt. bans the deposit of currency purchased from Open Market into Foreign Currency Accounts

October 10, 2020 (MLN): The Finance Ministry issued rules governing foreign currency accounts of individuals outlawing the deposit of foreign currency purchased from the open market into these accounts.

According to the notification, a Foreign Currency Account may be credited from remittances received from abroad through banking channels except for:

• Payment of goods exported from Pakistan;
• Payment of services rendered in or from Pakistan;
• Proceeds of securities issued or sold to non-residents; and
• Any foreign exchange borrowed from abroad under any general or special permission of SBP.

Furthermore, a FCA may be credited through transfer from other individual foreign currency accounts and profit proceeds and principal amount of investment made in any foreign currency linked investment scheme of the government.

The FCA shall not be credited with any foreign currency purchased from authorized dealers, exchange companies or money changers except as allowed by the SBP through general or special permission.

However, foreign currency brought from abroad and duly declared at the point of entry into Pakistan may be credited into these accounts.

The Notification clarified in the end that there shall be no restriction on cash withdrawals or transfer from the Foreign Currency Accounts.

According to Economist Muzzammil Aslam the policy is not driven to regulate exchange rate but to discourage dollarization followed by transfer overseas.

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