RDA inflows fall in October.

KARACHI -- Inflows through Roshan Digital Accounts (RDAs) have practically replaced the foreign investments in domestic bonds and constituted about 37 per cent of the foreign exchange reserves held by the State Bank of Pakistan (SBP).

The latest data issued by the SBP on Monday showed that RDA deposits swelled to $5.3 billion, but October witnessed the lowest inflow of $146 million since December 2020. It dropped by 13pc when compared with $168m in September.

The RDA was launched in September 2020 to attract investments from foreign investors since the dollar inflows through treasury bills and Pakistan Investment Bonds vanished after Covid hit Pakistan in March 2020. The central bank had to face a withdrawal of $3.5bn within a few months of the pandemic.

Currently, the central bank holds $8.9bn forex reserves including $3.344bn invested in Naya Pakistan Certificates (NPC) under the RDA initiative, which makes 37.5pc of the SBP's total forex holdings.

Overseas Pakistanis invest in NPCs with guaranteed returns and the risk is fully covered by the government.

However, the rise of interest rates the world over has increased pressure on SBP to enhance the returns on NPCs. Currently, the investor get a return o 5.5pc for three months, 6pc for six months, 6.5pc for 12 months, 6.75pc for three years and 7pc for five years.

Rising inflation the world over has forced developed and developing economies to increase their interest rates; Pakistan has also lifted its...