Emerging Markets Rates and Currencies Handbook

Pakistan (PKR - Pakistan Rupee) Citi in Pakistan Citi is in Pakistan since 1961. We are a Corporate and Investment Bank, dealing primarily with global subsidiaries. In addition, we service banks via FI route and advice to the Government on sovereign debt issues. Citi was the first bank in the country to offer custody services after the market was liberalized for foreign investment in 1991. Market Overview Flexible market-determined. PKR is only traded onshore. Main Currency Pairs: USDPKR (90%); JPYPKR; EURPKR; GBPPKR. The CB might intervene to prevent a possible overshooting or to counteract any disorderly market conditions while not suppressing an underling trend and in a manner consistent with building reserves. These interventions will not be sterilized, such that the stance of monetary policy will be correspondingly tightened if intervention is needed. Speculation in official FX market is not allowed by the Central Bank. Convertibility Convertible with restrictions onshore. Not convertible in off-shore market. Main volumes are coming from Corporates and Public Sector Entities with legitimate underlying exposure. There is also a healthy activity by foreign funds in the stock market and government fixed income market. Published regulations allow on-shore FX hedges against Exports, Import Letters of Credits and certain FCY loans. However informally, only CNY-denominated LC can be hedged up to 100% of LC value while import LC’s denominated in other convertible currencies can only be hedged up to 50% of LC value. regardless of the currency, any LC exceeding US$ 1 million equivalent requires prior market access from the Central Bank treasury which is a verbal guidance. Interest rate swaps are permitted in PAK Rupees only. A swap curve does not exist in Pakistan because IRSs are not actively traded, market swap rates are not available. Parties are free to use any eligible interest rate as 125