Compliance with FATF recommendations is one of the reasons
Dollar’s inter-bank rate dropped below Rs162 on Thursday after dropping another half rupee earlier in the day.
The dollar in the inter-bank market has been selling at Rs161.8. It was selling at Rs162.3 on Wednesday.
The last time the dollar traded at this level was nearly five months ago on May 28. The dollar rate has been spiraling down and its value declined nearly Rs4 since the start of this month.
A senior research analyst explained that one of the reasons for the gradual dollar rate decline is that the greenback is weakening internationally.
Another reason, according to him, is Pakistan’s compliance with the Financial Action Task Force (FATF) recommendations. By doing this, more dollars have been flowing through banking channels and hard cash movement of foreign currency through illegal channels of hawala and hundi have been curtailed.
The analyst added that Roshan Digital Accounts may also have had a slight role to play, but not a major one.
Another senior research analyst, Karim Punjani, also said that the amount, $24 million, so far received through Roshan Digital Accounts, is too low to affect the dollar rate.
But BMA Capital Head of Research, Faizan Ahmed, had a different opinion. He said the opening of over 21,000 accounts is phenomenal. The initiative has great potential and will attract more foreign exchange in the future, he said.
Ahmed says the remittance numbers have also been impressive. They were reported at $2.3 billion for September and a record $7.1 billion for the quarter ending in September.
Punjani says deferring of loan repayments for another six months has played a role in the rupee strengthening against the dollar.
He added that debt repayment of $1.8 billion, which was previously deferred till December 2020 in response to the coronavirus induced economic slowdown, has again been deferred for another six months, till June 2021.
However, he thinks the present trend of the dollar rate dropping may be short-lived as the rupee will again come under pressure when the International Monetary Fund programme resumes in January, which was suspended temporarily due to the pandemic.
He added that pressure on the rupee will increase when Pakistan has to make debt repayments next year.