RDA inflows at 19-month high | The Express Tribune
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KARACHI:
The foreign currency investment made by overseas Pakistanis through the Roshan Digital Account (RDA) reached a 19-month high at $182 million in March 2024, which indicated an increase in confidence of expatriate Pakistanis in the national economy.
According to the State Bank of Pakistan’s (SBP) data, the inflows increased by 29% to $182 million as compared to the investment of $141 million in February 2024.
With the fresh injection, total gross inflows have surged to a new high of $7.66 billion over a period of 43 months as the investment scheme for the expatriates was launched in September 2020.
Net inflows, however, settled at $1.28 billion in March after accountholders mostly utilised the investment in Pakistan or withdrew some of the funds in line with their requirements.
RDA inflows have helped stabilise Pakistan’s foreign exchange reserves around $8 billion.
Talking to The Express Tribune, Ismail Iqbal Securities Deputy Head of Research Saad Hanif said “this is an encouraging monthly inflow ($182 million), the highest since August 2022.”
He said the return of political and economic stability, particularly the stable rupee-dollar parity, improved the confidence of expatriate Pakistanis in the economy, which prompted them to invest and spend more in their homeland.
A large portion of the net inflow of $1.28 billion has been invested in the Naya Pakistan Certificates (NPCs), where the government is offering significantly higher returns in both rupee and dollar terms. The returns are even higher than the ones being offered by many developed countries.
Pakistan is giving a return of 21% on investment in NPCs in rupees and 9% in dollars.
“Pakistan is offering a 4% premium in return on investment in US dollars compared to the US and Europe. We have managed to provide better returns due to an elevated inflation reading and the high interest rate in the country.”
He was of the view that the investment in conventional NPCs and Shariah-compliant NPCs may increase ahead of a potential cut in interest rate globally and as Pakistan’s government could decide to increase returns.
He anticipated that inflows would remain around current levels in the remaining two months of fiscal year 2023-24, surpassing the important threshold of $8 billion by the end of June.
Hanif stressed that the next IMF loan programme would further improve the confidence of overseas Pakistanis in the domestic economy.
Topline Securities CEO Mohammad Sohail said in brief comments that gross RDA inflows of $182 million in March were higher than the average of $178 million since the launch of the scheme in September 2020.
Data breakdown showed that non-resident Pakistanis had withdrawn $1.57 billion out of the gross inflows of $7.66 billion since September 2020.
They have spent another $4.80 billion in Pakistan. Therefore, their net investment stands at $1.28 billion.
Out of the $1.28 billion, the expatriates invested $312 million in conventional NPCs, $528 million in Shariah-compliant NPCs and $31 million in the Pakistan Stock Exchange. They kept another $381 million in their bank accounts while other liabilities amounted to $31 million.
Forex reserves slip below $8b
Pakistan’s foreign exchange reserves, held by the SBP, dropped by $74 million to below $8 billion in the week ended on April 19, 2024.
Earlier, they stayed above the $8 billion mark for the past five weeks, according to the central bank data.
The SBP reported that its reserves decreased by $74 million due to external debt repayments.
Published in The Express Tribune, April 26th, 2024.
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