Pakistani rupee strengthens to nearly 41 vs UAE dirham

Dubai - Rupee rally likely to continue in short-term as forex reserves hit record high.

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By Waheed Abbas

Published: Wed 31 Mar 2021, 6:33 PM

Pakistan rupee rose to nearly 41 against the UAE dirham on Wednesday after Islamabad raised $2.5 billion in Eurobond issuance, taking the South Asian country’s foreign exchange reserves to a record high.

The rupee rose over one per cent from 41.68 on Tuesday to 41.17 versus UAE dirham on Wednesday mid-day. But later it lost some ground and was trading at 41.47 in the evening.

The rupee has been consistently gaining for the past few months, driven by surge in remittances from overseas Pakistan, growth in deposits of recently-launched Roshan Digital Accounts and foreign investments in Naya Pakistan Certificates.

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Analysts and businessmen foresee the rupee gaining further in the near future owing to consistent flow of foreign currencies.

Hamad Azhar, Pakistan’s finance minister, said rupee currency is standing on its own without the support and interference of the central bank.

$2.5 billion Eurobonds

Pakistan successfully raised $2.5 billion (Dh9.17 billion; Rs380 billion) through Eurobonds, taking the country’s foreign exchange reserves to an all-time high of $23.5 billion.

The previous all-time peak in foreign exchange reserves was seen in 2015-16 when reserves had touched $23 billion, but they later fell to $16.4 billion as government began to sell dollars in the market to support the local currency.

The dollar-denominated euro bonds were issued in three tranches with 5-year bonds offering six per cent interest rates, 10-year bonds offer 7.375 interest, while 30-year bonds were offered at 8.875 per cent interest rates.

Hamad Azhar, Pakistan’s finance minister, said the bids received for the bonds were $5 billion, reflecting strong interest from global investors and confidence in the South Asian country’s economy and future outlook.

Pakistan tapped the international bonds market for the first time in the past three and a half years.

In another development, Asian Development Bank (ADB) on Wednesday also approved a $300 million loan to finance the construction of a 300-megawatt hydropower plant that will increase the share of clean energy in Pakistan and improve the country’s energy security.

Earlier, Pakistan obtained $500 million loan from the International Monetary Fund and $1.33 billion assistance from the World Bank.

While addressing a press conference on Wednesday, Azhar also announced that a decision has been taken to allow import of sugar from India by the private sector due to low prices of sugar India as compared to Pakistan.

In addition, Pakistan will also import of cotton from India by June, added Azhar.

-waheedabbas@khaleejtimes.com

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Waheed Abbas

Published: Wed 31 Mar 2021, 6:33 PM

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