KARACHI: The State Bank of Pakistan (SBP) has imposed another restriction on buying of dollars from open market as it made biometric verification compulsory for all those who would buy $500 or above from open mar1(et. On the other hand, the dollar set a new record as the price rose to Rs171 on Wednesday.

`The exchange companies willbe required to conduct biometric veriñcation for all foreign currency sale transactions equivalent to $500 and above and outward remittances,` said the SBP on Wednesday.

Earlier, anyone could purchase dollars from exchange companies by providing a copy of national identity card. `This requirement will be applicable with effect from October 22, 2021,` the SBP added.

The major step has been takenapparently to stop outflow of dollars from the country to Afghanistan, which significantly increased dollar demands in the open market and destabilised the exchange rate.

The SBP has already taken several measures to get control over steep depreciation of local currency against the high demand of US dollar. The exchange companies have earlier highlighted through the media that outflow of dollars to Afghanistan is very high, while Fitch Ratings also recently cited this issue as one of the reasons for destabilisation of the exchange rate.

According to the measures taken by the State Bank, each person travelling to Afghanistan will be allowed to carry maximum $1,000 per visit, with the annual limit of $6,000.

`In order to enhance transparency in the foreign currency transactions by exchange companies and to curb undesirable outflow of cash foreign currency, the State Bank has introduced some regulatory measures, said a circularissued by the SBP.

Exchange companies will sell the foreign currency and make outward remittances, equivalent to $10,000 and above, against receipt of funds through cheque or banking channels only.

`These regulatory measures will help improve documentation of sale of foreign currency by exchange companies and place a check on undesirable outfiow of foreign currency, said the SBP.

`The condition of biometric on purchase of $500 and above will help reduce buying from the open market which is the target of the State Bank as well as the government,` said Malik Bostan, who heads theExchange Companies Association of Pakistan.

He said the proposal of biometric was under discussion with the exchange companies. He said the condition of $1,000 per person takeaway to Afghanistan was needed to stop unnecessary outflow of foreign currency from Pakistan, causing destabilisation of the exchange rate.

Since July when the political situation unfolded in Afghanistan, dollar`s demand in the open market here increased and rates went up. Earlier, the exchange companies were depositing 90 per cent of their surplus to banl(s. `Now we deposit about 50 per cent to banks while 50 per cent is sold out,` Mr Bostan said.

The State Bank had last month revised Prudential Regulations for Consumer Financing and said the targeted step would help in moderating demand growth in the economy, leading to slower import growth and thus supporting the balance of payments.

The changes in prudential regulations effectively prohibit financing for imported vehicles and tighten regulatory requirements for financing of domestically manufactured or assembled vehicles of more than 1000cc engine capacity and other consumer finance facilities like personalloans and credit cards, according to the SBP.

On Sept 30, the State Bank imposed100 per cent cash margin requirements (CMR) on imports of 114 more items, taking the total number of items subject to CMR to 525, to curb imports that had grossly destabilised the exchange rate and widened current account deficit.

The monthly increase in the current account deficit created serious threatforthe externalaccount ofthe government. The deficit widened by $1.5 billion in August from $838 million in July FY22.

FIA probes `illegal` currency business The Federal Investigation Agency has started investigation into alleged illegal currency business by a known foreign exchange company, said a senior FIA officer on Wednesday.

FIA Director Amir Faroogi told Dawn that they calle d Zafar Paracha, the owner of Paracha Exchange, at the State Bank circle for investigation purpose. `The FIA obtained record of the company dealing with dollars for the last one month,` the officer said, making it clear that the owner had not been detained.

The director said the FIA had launched the probe into the affairs of all exchange companies after a recent increase in the dollar rate as there were reports that certain elements were involved in hoarding, smuggling and illegal currency business to earn profits.