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Har Pakistani Ki Khabar

April saw RDA inflows reach $6 billion.

Image Source - Google | Image by Geo News

RDA inflows total $6.005 billion as of April 7.
As SBP reduced NPC rates during the past two months, RDA inflows increased, according to an expert.
Pakistanis living abroad increased their investments in NPCs as a result of the rupee’s fall.

KARACHI: According to The News, which cited the State Bank of Pakistan, foreign currency inflows through Roshan Digital Accounts (RDAs), a banking service allowing Pakistanis living abroad to manage digital accounts, had surpassed $6 billion. (SBP).

“The cumulative inflows have surpassed $6 billion, marking a new milestone for the Rohan Digital Account. We congratulate our Pakistanis living abroad for continuing to support SBP’s Roshan Digital Account, which has been a major success, the central bank stated on Twitter.

As of April 7, 2023, the SBP estimates that total RDA deposit inflows were $6.005 billion.

Between September 2020 and March 2023, Pakistan’s residents residing overseas sent $5.966 billion to the country via RDA.

“Flows via RDA have increased over the previous two months as a result of SBP’s revision of the NPC’s (Naya Pakistan Certificate) pricing to make them more appealing to consumers. According to Sana Tawfik, an analyst and economist at Arif Habib Limited, between 60 and 65 percent of these RDA flows are parked in NPCs.

In light of the political and economic unrest that has been the main source of worry, Tawfik continued, “On an FY (fiscal year) basis, the momentum of the flows has slowed down compared to the same period last year.”
Analysts attribute an increase in the monthly RDA inflows to increased rates of return on conventional and Shariah-compliant NPCs as well as currency depreciation.

In January, the government raised the profit rates on conventional and Islamic certificates denominated in domestic and foreign currencies.

To counteract growing inflation, major central banks kept up their ruthless monetary tightening. NPC’s returns became uncompetitive as a result.

Analysts claimed that as global interest rates increased and helped to drive capital into Pakistan, an increase in NPCs’ profit rates was urgently required.

Ismail Iqbal Securities’ head of research, Fahad Rauf, praised the SBP’s attempt to make the rates of NPC more competitive. However, he continued, “the rates should be further increased.”
Gross inflows have exceeded $6 billion, which is enormous. These are gross flows, though—there aren’t many significant net flows. The flows have therefore been helpful, but they are not persistent.

He said that the nation’s present shaky economic state had a role in this to some extent.

Additionally, given the present context of high interest rates across the world, the rates paid on these certificates are not enough of an incentive. The rise in flows has therefore decreased.

After the government lifted a fictitious ceiling on it in late January, the local currency fell in value. Switching to a market-based currency rate is one of the conditions for reviving the International Monetary Fund (IMF) bailout, which has been on hold for months.
Pakistanis living abroad were persuaded to expand their NPC investments as a result of the rupee’s fall.

However, some analysts think that the government may be able to draw foreign investment in rupee-denominated sovereign debt securities like T-bills and Pakistan Investment Bonds after the central bank raised its policy rate by 300 basis points to 21% and the rupee lost value against the dollar. (PIBs).

Hot money may also help the nation build up its foreign exchange reserves and, in the short term, help the rupee’s value relative to the dollar.

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