Pakistan’s Central Bank Restricts Cash Dollar Transactions
Pakistan’s central bank has implemented measures to limit cash transactions in US dollars, aiming to prevent the devaluation of the Pakistani rupee and manage undocumented dollar outflows.
As part of this initiative, the State Bank of Pakistan has issued a circular directing banks to refrain from providing cash dollar payments to individuals without foreign currency accounts.
Moreover, all currency exchange providers have been instructed to cap dollar payments to individuals at USD 500. Additional dollar transactions will require a verification process to validate requests.
According to the new guidelines, banks will now transfer dollars directly into the customers’ accounts rather than providing cash. Exchange company representatives noted that this policy doesn’t interfere with dollar purchases for travel or other needs; however, clients will need to present evidence of their need for foreign currency.
The circular from the SBP states, “To encourage a cashless economy, all foreign currency sales to residents in Pakistan for depositing into foreign currency accounts will now be conducted through account-to-account transfers.” This change means that those purchasing dollars for deposit will receive these funds directly into their accounts, while individuals without a foreign currency account will not be able to buy cash through banks.
Sardar Naseem from Galaxy Exchange explained, “If you buy dollars from an exchange company for deposit, the company will provide a check for that amount, which must then be deposited into your bank’s foreign currency account.” Private buyers are restricted from purchasing over $500 without providing purpose and supporting documentation, as well as completing biometric verification.
If someone is traveling for Hajj, Umrah, or studying, they will need to submit complete documentation to acquire dollar amounts exceeding $500.
Currency experts have indicated that those looking to purchase euros or pounds may encounter even greater delays. Transactions for euros or pounds made through exchange companies are issued by check, which could take 5 to 7 days to clear when deposited into the buyer’s foreign currency account.
Naseem remarked that these new regulations are clearly designed to limit the outflow of dollars and ensure that money exchangers do not hold significant amounts of cash dollars in their bank accounts, compelling them to sell directly within the banking market.
