Pakistan's exchange firms show willingness to open LCs for imports at open market rates

KARACHI (Web Desk) - The country s exchange firms have offered the federal government to pay for the opening of letters of credit (LCs) for imports as banks hesitate to do so owing to a shortage of foreign reserves.

In a statement, M Zafar Paracaha, the general secretary of the Exchange Companies Association, said a number of sectors and industries were facing issues owing to the banks  refusal to open LCs.

Taking stock of the crisis, the exchange companies decided to share the load, offering to assist the government by providing the needed US dollars, just as these firms do for credit card settlement, education purposes and medical treatments abroad, as well as Hajj, Umrah, religious pilgrimages, and other travels, he added.

Paracha said, “If the government allows, the exchange companies are ready to pay up to $50,000/- for the pending LCs and open new LCs to facilitate the concerns for the nation and country.”

He added that this would assure the availability of essentials and ease the government s burden.

Paracha further said they might finance imports (LCs) worth $200-250 million in the next month. However, he said they would offer the financing at Rs255/$ compared to Rs227/$ in the inter-bank market. The ECP office-bearer said the rate in the black market had jumped to over Rs270.

Paracha said financing LCs through the open market would help divert the much-needed foreign exchange from the illegal hawala-hundi markets to the open legal market.

The currency dealers  proposals come at a time when the country is facing dwindling foreign exchange reserves.