Pakistan rupee hits 2-year high
The Pakistani rupee rally continues, hitting a nearly two-year high against the US dollar and the UAE dirham on Tuesday, helped by the $500 million loan from the IMF, the $1.3 billion aid from the World Bank, as well as a strong flow of remittances and deposits in Roshan Digital Accounts (RDAs) from the country’s diaspora.
The South Asian currency gained nearly one per cent to 41.66 versus the UAE dirham (152.9 versus the US dollar) on Tuesday afternoon as against 42 previous day.
The rupee has gained more than nine per cent over the past seven months, trading at 45.88 on August 27, 2020.
As a result of strong foreign currency inflow, the State Bank of Pakistan’s foreign exchange reserves increased to $20.4 billion during the week ending on March 19, 2021.
Last week, IMF approved a $500 million disbursement to Pakistan for budget support after the IMF Executive Board completed delayed reviews of Pakistan’s $6 billion loan programme.
The World Bank also signed an agreement in Islamabad to provide $1.33 billion worth of assistance to boost the country’s forex reserves.
The RDAs’ popularity is growing among the country’s diaspora as these accounts allow them to invest directly in the stock market, buy property as well as make utility bills and school fee payments from abroad. Funds available in the account can be remitted back from Pakistan without any approval from any local bank or the central bank.
So far, according to the State Bank of Pakistan, over 100,000 RDAs have been opened from more than 100 countries, with deposits reaching $700 million since its launch last year.
“The Pakistani authorities have continued to make satisfactory progress under the Fund-supported program, which has been an important policy anchor during an unprecedented period,” said Antoinette Sayeh, deputy managing director of IMF.
Indian rupee at 1-year low
Meanwhile, the Indian rupee on Tuesday hit a one-year low, falling to 20 against the UAE dirham (73.55 versus dollar) on Tuesday due to increased dollar buying as well as rise in oil price.
The currency lost more than one rupee on Tuesday as it was trading as high as 72.45 on Monday morning.
Traders suspect that the central bank is intervening in the currency market and buying dollar through local banks.
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