SBP directs banks to ensure liquidity for rupee forward maturities

KARACHI: The State Bank of Pakistan (SBP) has directed to ensure sufficient liquidity for settlement of rupee forward maturities.

In a circular issued to all president and chief executives of the banks, the central bank issued instructions related to settlement of Pak Rupee forward maturities.

The SBP said that as per existing practice, the Pak Rupee maturities in respect of forward leg of foreign exchange interbank contracts (PKR forward maturities) are settled on End-of-Day (EOD) basis.

Apart from not being in line with international best practice, the EOD basis also carries associated risk of unjustified intraday float.

“In view of above, it has been decided that PKR forward maturities would be settled on Start-of-Day (SOD) basis effective December 23, 2019 and onwards.”

The banks shall ensure sufficient liquidity in their respective Pak Rupee accounts maintained with SBPBSC-Karachi Office on the settlement date of PKR forward maturities in order to avoid intraday liquidity shortages.

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