The Exchange Companies Association of Pakistan (ECAP) on Friday demanded an immediate and temporary ban on gold import as the association feels that the higher imports have raised dollar demand in the domestic currency market. Finance Minister Ishaq Dar and State Bank of Pakistan Governor Yaseen Anwar held meeting with representatives of ECAP at SBP Karachi to discuss various issues relating to exchange companies particularly exchange rate.
During the meeting, ECAP representative told the minister that for last few months, gold import has increased sharply and a massive surge of some 400 percent has been witnessed due to decline in the commodity prices in world market. “We have informed the meeting that foreign exchange for the import of gold is being purchased from open currency market and accordingly the demand for dollar in the open currency market has also risen to $40 million per day against actual requirement of $15-20 million,” said Malik Bostan, Chairman ECAP.
The higher dollar demand for the import of gold is the main reason for some 5 percent depreciation of PKR to the dollar during last few weeks, he added. “In the wake of current situation, we urge the government to impose an immediate and temporary ban on import of gold to stabilise the currency market and stop the rupee slide,” he said.
The ECAP representative informed the minister that presently there is no duty on gold import, as importers/jewellers are required to re-export the commodity in shape of jewellery. However, the importers/jewellers are exporting artificial jewellery in the name of gold to fulfil the requirement, while imported gold is being smuggled to India, where gold import is much expensive due to higher duty structure. “We believe that a temporary ban on the import of gold will support Pak rupee, which is gradually depreciating against the greenback,” Bostan said.
The ECAP has also discussed the new directives for exchange companies issued by SBP. They said that SBP””s new directives have created panic in the currency market and this is not possible for exchange companies to follow the requirement raised by the central bank, the chairman said. “We urge SBP to withdraw new instructions and free the market,” he added.
He said the finance minister has assured the delegation that he will discuss these issues with other ministries. The minister has also asked governor SBP to hold another meeting with exchange companies and resolve all issued faced by the companies. Sources said another follow-up meeting between exchange companies and SBP will be held today at the SBP head office to discuss regulatory issues. The meeting will be chaired by Yaseen Anwar governor SBP.
SBP adds: Finance Minister Ishaq Dar and the Governor SBP held a meeting on July 26, 2013 with representatives of Exchange Companies Association of Pakistan (ECAP) at SBP Karachi. The productive meeting was held in a very cordial and positive atmosphere. The finance minister at the outset expressed his appreciation of the positive role played by exchange companies in the past for the country and hoped that they would once again remain conscious of their responsibilities in stabilising the exchange rate in support of Pakistan””s economy.
He expressed concern over the rising spread between the Interbank and Kerb market rates recently and emphasised his confidence that exchange companies would work towards narrowing the gap. The ECAP members presented their views and proposals, following which it was decided that ECAP would have another meeting with the Governor SBP to deliberate on the issues and arrive at substantive measures for implementation with expectation that exchange companies would play their positive role in bringing the spread down.