Emerging Markets Rates and Currencies Handbook

License Requirements None, barring the onus on Authorized FX Dealer (bank) to ensure that the client undertaking FX trades in the formal interbank market can support the sale/purchase of foreign currency with valid underlying exposures. Requirements to open a foreign currency account The funds available in an FCY account are freely repatriable subject to the provisions of the FE manual mentioned as under. Facility is not available to airlines and shipping companies operating in/through Pakistan or collecting passage and freight in Pakistan and the investment banks, leasing companies and modaraba companies including those which have been granted licenses to deal in foreign exchange. Payments in foreign exchange received by an Authorized Dealer on behalf of a resident in Pakistan must not be retained in foreign exchange but must be converted into Rupees unless the State Bank has given general or special permission to the beneficiary to retain the foreign exchange received by him. Foreign currency accounts can be fed by remittances received from abroad, travelers cheques issued outside Pakistan and foreign exchange generated by encashment of securities issued by the Government of Pakistan. A foreign currency account of a citizen of Pakistan resident in Pakistan can also be fed with cash foreign currency only if the account holder is a filer as defined in Income Tax Ordinance. These accounts cannot be fed by: 1. Any foreign exchange borrowed under any general or specific permission given by the State Bank, unless otherwise permitted; 2. Any payment for goods exported from Pakistan; 3. Proceeds of securities issued or sold to non- residents; 4. Any payment received for services rendered in or from Pakistan; 5. Earnings or profits of the overseas offices or branches of Pakistani firms and companies including banks, investment of resident Pakistanis abroad; 6. Any foreign exchange purchased from an Authorized Dealer in Pakistan for any purpose. Deal Management Rollover: Yes with supporting documents. Unwinding: FX hedges up to 1 year cannot be unwound prior to maturity; derivatives can be unwound prior to maturity. Early Maturity: Yes with supporting documents. Documentation Requirements Pre-closing documentation required to support the respective FX transaction for Central Bank classification against Trade (import/export), non-trade remittances like royalty, dividend, technical fee etc. Trade Flows Pre-closing documentation required to support the respective FX transaction for Central Bank classification against Trade (import/export), non-trade remittances like (royalty, dividend, technical fee etc). Capital Flow and FDI All sectors and activities are open for foreign investment unless specifically prohibited for national security reasons and/or public safety including arms and ammunitions, high explosives, radioactive substances, securities, currency/mint and consumable alcohol. Proof of underlying transaction needed for all spot Purchases, sales. Forwards are allowed to hedge the amount brought in by foreign investors up to a max 1 year but not less than a month. Interest/dividends cannot be hedged. Additional Comments All payments have to be against valid underlying exposures and hedging is restricted to specific types of loans and import payments against letters of credit. Citibank, N.A. 15th Floor, The Harbour Front, Dolmen City, Block-4, Scheme 5, Clifton, Karachi FX Sales Contact: +9221 3529 3541 upto 6 lines