The exchange companies in Pakistan are prepared to open Letters of Credit for imports at open market prices.

KARACHI – Because banks are hesitant to create LCs for imports because to a lack of foreign reserves, the country’s exchange corporations have volunteered to pay for this process on behalf of the federal government.

M. Zafar Paracaha, the general secretary of the Exchange Companies Association, said in a statement that a variety of companies and sectors were having problems as a result of the banks’ unwillingness to establish LCs.

The exchange companies decided to split the burden after taking stock of the crisis and offered to help the government by providing the required US dollars, just as these companies do for credit card settlement, education expenses, international medical treatments, the Hajj, Umrah, religious pilgrimages, and other travel, he continued.

The exchange businesses are willing to pay up to $50,000 for the outstanding LCs and create new LCs to address the issues for the nation and country, according to Paracha, if the government permits.

He continued by saying that both the government’s workload and the supply of necessities will be ensured.

Paracha said that they may finance imports (LCs) totaling $200–250 million in the next month. Instead of the interbank market rate of Rs227/$, he said they would supply the finance at Rs255/$. The ECP office-bearer said that the black market price had increased to much above Rs270.

According to Paracha, funding LCs on the open market would help shift much needed foreign currency away from the illicit hawala-hundi marketplaces and into the open, legal market.

The offers from the currency traders come while the nation’s foreign exchange reserves are decreasing.