This shows improved dollar inflows in Pakistan: experts
The dollar can now be bought for Rs157.95 in the open market as the greenback rate has dropped to a one-year low. The last time dollar was traded below Rs158 was on March 10 last year.
“The State Bank took several initiatives such as Roshan Digital Accounts last year during the pandemic,” said Zafar Paracha, the secretary of the Exchange Companies Association of Pakistan. “The dropping rate shows those initiatives have been bearing fruits.”
He added that the inward remittances, the foreign exchange overseas Pakistanis send back to the country, have been strong. The remittances in the first seven months of the fiscal year 2021 (July to January) stood at $16.5 billion, which was 24% higher than the same period of the previous year.
Last month, the State Bank announced that the remittances send through Roshan Digital Accounts have crossed $500 million.
Paracha added that Naya Pakistan Certificate also offers lucrative 7% interest for overseas Pakistanis, which was also increasing dollar inflow to the country.
Meanwhile, Pakistan’s current account in the first seven months of the fiscal year 2021 has also been in the surplus of nearly one billion dollars. The current account was in deficit of $2.5 billion for the same period last year.
Paracha further said that initiatives taken on the recommendation of the Financial Action Task Force have also reduced the dollar’s illegal movement in and out of the country. “The dollars have now been brought in the banking channel, which is also strengthening the rupee against the dollar,” he said.
He added that the ‘hawala and hundi’ transactions have been curtailed too.
“I believe Pakistan has implemented all FATF recommendations. The situation in Pakistan is much better than many other countries that are not on the FATF grey list. I believe we will soon be getting out of the list now.”
BMA Capital Executive Director Saad Hashmi said that inflows through Roshan Digital Accounts and stable foreign exchange reserves have been the reason behind the decreasing dollar rate. Foreign exchange reserves with the State Bank are standing in the vicinity of $13 billion for many weeks.
“The market sentiments are also positive regarding the rupee and people are investing in stocks now,” said Hashmi.
When people expect the dollar rate to increase, some of them start buying dollars with an expectation to make money when it actually goes up. But when the expectations are that the dollar rate will fall or remain stable, people start to invest elsewhere such as company stocks.
“The dollar rate is now market-driven and the expectations are that it will stay in the range of Rs155 and Rs165,” Hashmi said.