Roshan Digital Accounts (RDAs), a banking facility designed for overseas Pakistanis to operate digital accounts, have seen foreign currency inflows surpass the $6 billion mark, as the State Bank of Pakistan (SBP) reported.
The central bank thanked overseas Pakistanis for their continued trust in the success of RDAs. As of April 7, 2023, cumulative RDA deposit inflows reached $6.005 billion, with Pakistan receiving $5.966 billion from its citizens living abroad through RDAs between September 2020 and March 2023.
The uptick in RDA inflows has been attributed to rising returns on conventional and Shariah-compliant Naya Pakistan Certificates (NPCs) and currency depreciation. In January, the government enhanced profit rates on conventional and Islamic certificates denominated in local and foreign currencies. The move was deemed necessary as global interest rates increased, making the returns on NPCs less competitive.
The RDA inflows improved in the last two months after SBP revised NPC rates to make them more competitive. However, the inflows have slowed down on a fiscal year basis compared to last year’s period, mainly due to political and economic turmoil.
While the gross inflows have crossed $6 billion, net flows outstanding are lower. Fahad Rauf, head of research at Ismail Iqbal Securities, believes that the rates offered on certificates are not attractive enough given the current high-interest rate environment, resulting in reduced growth in inflows. Rauf suggests that the rates should be further increased.
After the government removed an artificial cap on the local currency in late January and the SBP increased its policy rate by 300 basis points to 21%, the rupee’s depreciation motivated overseas Pakistanis to invest more in NPCs.
The government may now attract foreign investment in rupee-denominated sovereign debt securities, such as T-bills and Pakistan Investment Bonds (PIBs), potentially supporting the rupee’s value against the dollar, increasing forex reserves in the short term.
 see foreign currency inflows cross the $6 billion mark, driven by rising returns on Naya Pakistan Certificates (NPCs) and currency depreciation.){kind=link}