KARACHI: In a bid to ensure transparency, the State Bank of Pakistan (SBP) directed the exchange companies to adopt the new mechanism for calculating and publishing end-of-day exchange rates for six major currencies from December 26.
In a letter to the Exchange Companies Association of Pakistan (ECAP), the central bank said that the new method would ensure a more representative and transparent rate for the open market.
Under the new protocol, exchange companies that hold at least 75% of the market share will be required to provide daily buying and selling rates for the US dollar, euro, pound sterling, Japanese yen, UAE dirham and Saudi riyal to ECAP, which will then calculate and disseminate the average rates.
At least eight exchange companies must participate in the buying and selling data submission, which will be done through a dedicated email channel between 4pm and 4:30pm, the letter said.
Exchange companies that fail to provide rates for five business days in a month will have to explain the reason to the SBP through ECAP, it added. The SBP reserves the right to nominate a replacement exchange company in case of a license suspension or cancellation of a contributing exchange company, based on the market share distribution.
ECAP will compute the simple average buying and selling rates for each currency from the submitted data and disseminate these rates to stakeholders by 5pm after compilation.
The ECAP will assign the responsibility for data collection, calculation and dissemination to its office bearers, and ensure that no other exchange companies release end-of-day exchange rates under its name, the letter said.
All exchange companies will use the mid-rate of ECAP’s published end-of-day rates for revaluation purposes, including regulatory exposure calculations.
The letter also stressed that ECAP will be responsible for ensuring the accuracy of the data disseminated to the public.
