Karachi, August 2, 2025 – The State Bank of Pakistan (SBP) has announced a significant revision in the Foreign Exchange Exposure Limit (FEEL) for banks, aiming to enhance flexibility in foreign exchange operations amid evolving market dynamics.
In a circular issued on August 1, 2025, the SBP stated that, effective from August 4, 2025, the foreign exchange exposure limit will now be calculated as 7.5% of each bank’s Tier-1 Capital, as per the most recent annual audited financial statements. This change is intended to support Authorized Dealers (ADs), or banks, in managing their foreign exchange operations more efficiently and in line with current trade volumes and market conditions.
Under the revised policy, the SBP will notify each bank of its updated FEEL based on its specific Tier-1 Capital position. This move replaces the previous method introduced in July 2020, where the FEEL was capped at 25% of Paid-up Capital (free of losses) and subject to a maximum cap of PKR 5 billion. That earlier framework also allowed the SBP to assign reduced limits based on an AD’s behavior in the FX market.
The SBP emphasized that aside from the limit change, all other existing instructions related to FEEL will remain in effect.
By updating the foreign exchange exposure limit criteria, the SBP aims to provide a more dynamic and risk-sensitive approach. This adjustment reflects the central bank’s ongoing efforts to strengthen market discipline while allowing banks greater flexibility in responding to foreign exchange market demands.