The State Bank of Pakistan has allowed exchange companies to enter into short-term forward sale transactions with banks for up to five working days against incoming home remittances, in a move aimed at enhancing inflows and improving liquidity management.
The decision, announced through amendments to foreign exchange regulations, marks a shift from previous rules that required exchange companies to surrender foreign currency on the same day without any forward cover.
Under the revised framework, exchange companies can now book forward sales with authorized dealers based on expected remittance inflows, subject to strict conditions. However, they must still surrender 100% of foreign currency received from remittances in equivalent U.S. dollars to the interbank market.
The central bank said the facility would help exchange companies manage short-term currency risks and operational flows more effectively, while supporting formal remittance channels.
The forward contracts can be booked for a maximum of five working days and must be settled within that period. Companies may base transactions on average remittance inflows over the previous 15 days, supported by transaction records from money transfer operators.
In case of shortfalls, settlement can be made using other foreign currency holdings, though such adjustments cannot exceed 10% of the total transaction value. Contracts not executed must be closed at prevailing market rates.
The SBP warned that any misuse of the facility, including speculative activity or repeated cancellations of forward deals, would result in strict regulatory action.
Industry representatives welcomed the move, saying it introduces a structured and transparent mechanism to manage foreign exchange flows. Zafar Paracha, head of the Exchange Companies Association of Pakistan, said the initiative would reduce uncertainty, improve planning and encourage remittance inflows through formal channels.
Analysts said the policy could strengthen Pakistan’s external account by incentivizing official remittance flows while maintaining oversight through mandatory surrender requirements.
The move comes as Pakistan continues efforts to stabilize its foreign exchange reserves and improve dollar liquidity amid ongoing economic challenges.