The stabilising Pakistani currency on Monday dropped slightly and stood below Rs284 against the US dollar in the inter-bank market over a squeeze on foreign currency, ending a nine-day strengthening phase.
According to State Bank of Pakistan’s (SBP) data, the rupee inched down 0.01%, or Rs0.03, and closed at Rs283.90 against the greenback.
The nominal drop came after the inflow of workers’ remittances decreased 9% month-on-month to $2.25 billion in November compared to nearly $2.50 billion in the prior month.
Also, the central bank reported a drop of $237 million in its foreign exchange reserves that stood at $7.02 billion with less than two months of import cover. This also mounted some pressure on the rupee.
Earlier, the currency cumulatively improved 0.62%, or Rs1.77, in the past nine working days since the International Monetary Fund (IMF) successfully completed its first review under the $3 billion loan programme in mid-November 2023.
The Fund’s staff has approved the release of second loan tranche of $700 million and its executive board is expected to give the final nod in its meeting on January 11, 2024.
Exchange Companies Association of Pakistan (ECAP) reported that the local currency remained unchanged at Rs284.75/$ for the second successive day in the open market.
ECAP General Secretary Zafar Paracha had said last week that the rupee would recover to below Rs280/$ by the end of December, driven by the signing of multibillion-dollar investment deals with friendly countries.
Read: Rupee at 5-week high over IMF loan optimism
The rupee would gain further strength and reach Rs250-260/$ by the end of June 2024 on the materialisation of investment plans, he projected.
RDA inflows cross $7b
The foreign currency inflows coming from overseas Pakistanis through the Roshan Digital Account (RDA) hit another milestone by surpassing $7 billion in November 2023 as the expatriates’ confidence grew in Pakistan’s economy, according to the SBP.
With fresh receipts of $137 million in November, gross inflows touched an all-time high at $7.03 billion, a level reached over a period of 39 months since the inception of the RDA scheme in September 2020.
At the same time, net inflows improved to a 10-month high at $1.18 billion as expatriate Pakistanis utilised $4.32 billion in the country’s economy and withdrew $1.53 billion.
Giving the breakdown of net liabilities amounting to $1.18 billion, the central bank reported that non-resident Pakistanis made a net investment of $323 million in the conventional Naya Pakistan Certificates (NPCs) and invested another $432 million in Shariah-compliant NPCs.
In addition, they poured $29 million into the Pakistan Stock Exchange (PSX) and deposited $374 million in local banks. Other liabilities amounted to $23 million, the central bank said. Investments in saving certificates and the stock market improved slightly in November 2023 compared to October after the government revised up the rate of return on the certificates and the bourse spiked.
Published in The Express Tribune, December 12th, 2023.
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