Rupee may stay stable on new housing scheme for expats

KARACHI: A new house financing scheme for overseas Pakistanis will encourage more external investment that will help the rupee make gains next week, analysts said on Saturday.

A day ago, Prime Minister Imran Khan launched “Roshan Apna Ghar” scheme that will enable overseas Pakistanis to buy residential property for themselves and for their families in the country.

This initiative is a ray of hope for the local currency, which depreciated massively during the last couple of weeks. Pakistan desperately needs such schemes to bring dollars into the country to support the external sector.

The State Bank of Pakistan (SBP) launched Roshan Digital Account (RDA) on September 10, 2020 for nonresident Pakistanis. This scheme helped the country bring $2 billion in such accounts.

The SBP on August 25, 2021 announced the launch of the Roshan Apna Ghar Scheme for the nonresident Pakistanis. After this announcement, the rupee recovered 66 paisas against the dollar in the next two days to close the week at Rs165.62.

The local currency fell to Rs166.28 against the greenback in the interbank foreign exchange market on August 25, 2021.

The inflows of $2.75 billion by the International Monetary Fund (IMF) on August 24, 2021 failed to support the local currency.

The local unit witnessed a massive decline since the start of the current fiscal year. The rupee lost around Rs8.08 against the dollar in the interbank market till August 27, 2021 after closing at Rs157.54 in the interbank foreign exchange market.

The primary reason behind the rupee depreciation may be robust growth in imports. The import bill sharply increased 52.45 per cent to $5.6 billion in July 2021, compared with $3.67 billion during the same period of the last year.

Although the exports registered a 17 per cent increase to $2.34 billion in July 2021, it failed to contain the trade deficit. The trade deficit widened 95 per cent to $3.26 billion in the first month of the current fiscal year, compared with $1.67 billion in the same month of the last fiscal year.

The imbalance in trade resulted in a $773 million current account deficit for the first month of the current fiscal year. The workers’ remittances stood at $2.707 billion in July 2021, which maintained over $2 billion for the 14th consecutive month, but it was slightly lower, compared with $2.764 billion during the same month of the last year.

The currency experts said the country needs to improve exports to support the foreign currency. They also said the government should take measures to stop grey channels in the wake of instability in Afghanistan.