Rupee weakens for second straight day

Dollar’s global strength piles pressure on Pakistani currency

Our Correspondent May 22, 2024


Pakistani currency dropped Rs0.09 and closed at Rs278.39 against the US dollar in the inter-bank market on Tuesday, maintaining its downturn for the second consecutive day amid the International Monetary Fund (IMF)’s recommendation to let the rupee devalue further.

According to the State Bank of Pakistan (SBP)’s data, the rupee had closed at Rs278.30 against the greenback on Monday.

The IMF has recently assumed that the Pakistani currency will depreciate to Rs329/$ by the end of June 2025, a drop of around 18% over the next 13 months.

Market talk suggests the US dollar had also strengthened against major global currencies, which mounted pressure on the Pakistani rupee. In addition, the demand for dollars has ticked up following a gradual increase in imports of goods and services compared to supply of the greenback.

The currency has cumulatively decreased 0.49%, or Rs1.36, in the past eight weeks since hitting a five-and-a-half-month high close at Rs277.03/$ in the last week of March 2024.

The Exchange Companies Association of Pakistan, however, reported an uptick of Rs0.11 in the rupee value on a day-on-day basis and it settled at Rs279.43/$ in the open market.

RDA inflows

The rupee maintained its downtrend in the inter-bank market despite inflows into the Roshan Digital Account (RDA), which remained stable at $171 million in April 2024, taking the overall gross receipts to $7.83 billion in the past 44 months.

Fresh investments from overseas Pakistanis into the Naya Pakistan Certificates (NPC) and Pakistan Stock Exchange (PSX) in April were higher than the six-month average of $151 million. They helped stabilise Pakistan’s foreign exchange reserves, held by the SBP, above $9 billion.

RDA inflows were slightly lower when compared with the historical average of $178 million per month, according to research house Topline Securities.

Data breakdown suggests that non-resident Pakistanis utilised $4.925 billion in their home country out of the gross inflows of $7.83 billion since the launch of the RDA scheme in September 2020.

Apart from that, they have withdrawn $1.58 billion since the commencement of the online banking and investment facility.

Consequently, the total funds that could be repatriated were calculated at $1.32 billion as of April 30, 2024. Out of this, the overseas Pakistanis have invested $317 million in the NPC, $523 million in the Shariah-compliant NPC, $33 million in companies listed at the stock exchange while other liabilities came in at $28 million.

Published in The Express Tribune, May 22nd, 2024.

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