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No plan to restrict RDA, FCA and safety deposit lockers: Pakistan central bank

The Pakistan rupee slips again and shed 1.07% of its value against the US dollar due to high demand in the interbank and open markets

Pakistan on Monday said there is no proposal under consideration to put any restriction on foreign currency accounts (FCA), Roshan Digital Accounts (RDA) and safety deposit lockers.

While refuting baseless claims circulating on social media regarding FCA, RDA and safety deposit lockers, the government of Pakistan assured all account holders maintaining FCA, RDA and safety deposit lockers in banks in Pakistan that their accounts and lockers are completely safe.

In a joint statement, State Bank of Pakistan (SBP) and Ministry of Finance strongly denied rumours circulating on social media that the government or SBP is considering freezing or placing restrictions on withdrawals from FCA, RDA and safety deposit lockers.

Some media reports also indicate that the government is considering to impose ‘economic emergency’ in the country to contain rising current account deficit.

“Such rumours are absolutely incorrect and baseless. It is clarified that such a proposal has neither been considered presently nor in the past,” the statement said.

Legal protection

Moreover, foreign currency accounts including RDA are legally protected under the Foreign Currency Accounts (Protection) Ordinance 2001, and the Government and the State Bank are committed to protecting all the financial assets in Pakistan including the ones mentioned above, it added.

The Government and State Bank are taking all necessary measures to ensure macroeconomic stability in the country. The recent difficult decisions taken by the government, including the reduction of subsidy on petroleum products, will pave the way to reach an agreement with the IMF and release of the IMF tranche and financial assistance from other multilateral agencies and friendly countries.

“We are confident that these measures will relieve the temporary stress being faced due to elevated global commodity prices and geo political tensions, and eliminate uncertainty in the economy,” according to the statement.

Rupee slips again

Meanwhile, the Pakistan rupee opened the week on a negative note by losing another 1.07 per cent of its value against the US dollar in the inter-bank market. The local currency shed Rs2.14 against the greenback and closed over the 200 level at 200.06 (54.51 against the dirham) compared to 197.92 against the US dollar (53.92 versus the dirham) on Friday.

In the open market, the rupee was exchanging hands at over 205 per US dollar as the importers were buying the greenback to pay their import bills.

Rising current account deficit

The rupee, which recovered some grounds against the dollar last week, turned bearish after Moody’s downgraded the outlook on Pakistan from stable to negative on Thursday. Moody’s warned that Pakistan’s current account deficit will remain under significant pressure on elevated global commodity prices through 2022-23.

“Pakistan’s trade deficit widened by 57.85 per cent during the first 11 months (July-May) of the outgoing fiscal year 2021-22, and reached $43.334 billion compared to $27.452 billion during the same period of 2020-21,” according to data shared by the Pakistan Bureau of Statistics.

The currency dealer said the ongoing volatility does not give a good message, as the country is already facing an emergency situation. They said the rupee will remain under pressure unless the government convinces the International Monetary Fund (IMF) to revive $6 billion extended fund facility.

“There is a high demand for the US dollars as the importers need to clear their import bills while the government also facing a daunting challenge to finance oil payments with dwindling foreign exchange reserves,” said an analyst.

— muzaffarrizvi@khaleejtimes.com