The rupee has been consistently gaining in the past few months, driven by a surge in remittances from overseas Pakistanis.

Pakistan raises $2.5B in bonds; forex reserves hit all-time high

Dubai - Bids received for bonds at $5 billion, reflecting strong interest from global investors

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By Waheed Abbas

Published: Wed 31 Mar 2021, 7:05 PM

Last updated: Wed 31 Mar 2021, 7:11 PM

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

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

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The dollar-denominated eurobonds were issued in three tranches with five-year bonds offering six per cent interest rates, 10-year bonds offering 7.375 per cent and 30-year bonds at 8.875 per cent.

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

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

Addressing a Press conference on Wednesday, Azhar also announced that a decision has been taken to allow the import of sugar from India by the private sector due to low prices of sugar in its neighbour compared to Pakistan.

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

Rupee strengthens further

The Pakistani rupee gained further on Wednesday as the reserves jumped following the eurobond issuance.

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

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

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

Azhar said the currency is standing on its own without the support and intervention of the central bank.

— waheedabbas@khaleejtimes.com

Waheed Abbas

Published: Wed 31 Mar 2021, 7:05 PM

Last updated: Wed 31 Mar 2021, 7:11 PM

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