ECAP adopts SBP-directed mechanism for issuing exchange rates

WEB DESK: In compliance with the directives issued by the State Bank of Pakistan (SBP), the Exchange Companies Association of Pakistan (ECAP) has implemented a new mechanism for determining the exchange rates of foreign currencies.

Earlier, at the close of business hours in the open currency market, two distinct closing rates were issued—one by ECAP and another by the Forex Association of Pakistan (FAP)—for major currencies, including the US dollar (USD), euro, pound sterling (GBP), Japanese yen (JPY), UAE dirham (AED), and Saudi riyal (SAR).

The central bank, aiming to enhance transparency and credibility in the open currency market, devised a mechanism for compiling the open market exchange rates of select foreign currencies.

The ECAP was directed to implement this new exchange rate compilation mechanism by December 26, 2023.

According to SBP’s guidelines, 12 contributing exchange companies, including Pakistan Currency, Ravi, Link International, Dollar East, Wall Street, Habib Qatar International, Sadiq, Zed Que, Paragon, HBL, AA, and Sky Exchange Company, are now submitting the closing rates (buying and selling) for the six major currencies to ECAP’s dedicated email.

After compilation, ECAP issues a single rate for the six selected leading currencies.

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According to Business Recorder, the General Secretary of ECAP said that the adoption of the new exchange rate mechanism for compiling six currencies is seamless, simple, and transparent.

He noted that all exchange companies are fully onboard and supportive to ensure the success of this new mechanism.

In accordance with SBP directives, the average buying and selling rates of the six leading currencies are disseminated by ECAP to stakeholders by 5:00 PM.

It is worth mentioning that the exchange rate for this specific instance was issued at 6:00 PM on Wednesday.

This delay is attributed to the introduction of a proper mechanism for the exchange rate for the first time.

It is expected that as exchange companies become more familiar with the process, rates will be released in a more timely manner in the future.

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