SBP directed to take action against manipulators of exchange rate volatility

ISLAMABAD, Oct 04 (APP): The National Assembly Standing Committee on Finance and Revenue on Tuesday directed the State Bank of Pakistan to take appropriate action against all the banks and exchange companies involved in manipulating volatility of the exchange rate.

The State Bank has also been asked to take appropriate action against elements involved in exchange rate manipulation so that no one dares to play with the economy of the country.

The committee met under the chairmanship of Member of National Assembly (MNA) Qaiser Ahmad Sheikh, here in the Parliament House.

The committee was of the view that during recent volatility in the exchange rate and the difference between the interbank rate and the rate offered by the Exchange Companies, few banks earned exorbitant profits.

The committee was apprised that few banks and forex exchange companies were suspected of manipulating volatility in exchange rate.

The SBP taking cognizance initiated strict monitoring of the foreign exchange operations of banks and exchange companies and has initiated inquiry proceedings into the violations made against SBP regulations.

The Governor State Bank Jameel Ahmad further apprised that SME sector was the backbone of the country’s economy which had not been provided with relevant finances which it deserved.

He said that on basis of cash flow the SME sector can avail credit from commercial banks.

Regarding incentives given to the industrial and trading sector during COVID-19, the Governor State Bank said that the Bank adopted multipronged approach to facilitate industrial and trading sector.

He said that those measures included debt rescheduling, financing the large and medium industries for carrying out their operations, besides chalking out measures that helped in avoiding retrenchment during the pandemic.

He also informed that export based industries were also promoted.

The committee pointed that the measures taken by the SBP were exceptional but the benefits did not trickle down and financial incentives were mostly availed by large scale industry.

The committee directed the State Bank to provide details sector wise about who benefited from those incentives.

The committee also decided to discuss the proposed measures for rehabilitation of the flood affectees, agriculture and commercial sectors in its next meeting.

The committee was of the view that devastation caused by floods was massive and it needed proper continuous fiscal policy measures.

While discussing the issues of SBP restriction on import of forklifts, the committee was of the view that the industry was suffering and the State Bank should look into this.

The representatives of the Importers Association apprised that due to restrictions imposed by SBP, commercial banks had stopped confirming letters of credits (LOCs).

The Governor State Bank informed that there was no restriction on LOCs opened before 5th July, 2022.

The Committee meeting was attended by Members of the Committee, Minister of State for Finance, Secretary Finance, Chairman FBR, Governor State Bank and other senior officers of the concerned departments.