Rupee recovers against USD after new credit card settlement directive

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Rupee recovers against USD after new credit card settlement directive

KARACHI: As reported by SBP, which was cited by ARY News, the US dollar (USD) suffered an important decline versus the Pakistani rupee (PKR) on Thursday on the open market. The local currency (USD) decreased by PKR25 when trading at Rs290 on the open market, according to the State Bank of Pakistan.

The central bank has given banks the authority to buy dollars from the interbank market to settle international card payments in an effort to reduce the variance in exchange rates between the official and informal markets. In order to resume a $6.5 billion bailout program, the International Monetary Fund (IMF) insisted that Pakistan resolve its currency issues.

The State Bank of Pakistan (SBP) published a circular in response to stakeholder comments announcing that approved dealers can now purchase USD on the interbank market for the settlement of card-based cross-border transactions using global payment systems like Visa and MasterCard. These rules are in force right away and will last through July 31, 2023.

To settle card-based cross-border transactions, banks formerly had to buy US dollars from exchange companies. However, due to the limited availability of foreign currency, banks had to buy dollars on the open market in order to settle debit/credit card purchases made at international websites and stores. This issue has become more prevalent in Pakistan as a result of the rising usage and use of digital instruments.

Pakistan has seen a substantial rise in the usage of digital payment instruments, according to the SBP’s quarterly analysis of payment systems. Debit cards constitute the majority of the cards in use (76.7 percent, or 37.1 million of them), followed by social welfare cards (19.1 percent, or 9.2 million), credit cards (4 percent, or 1.9 million), and prepaid cards (0.2 percent).

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