The United Arab Emirates stated on Dec 21st 2018, that it would soon deposit $3 billion in the State Bank of Pakistan.
The motive would be “to support the financial and monetary policy of the country”. Following by the Abu Dhabi Fund for Development, which stated that it would deposit this amount in the upcoming days.
For us, it seems to be good news. It is expected to keep up the pro-rupee sentiments alive for some time. Once the promised $3bn actually comes in, it may even embolden our central bank to increase its support for the rupee.
A little time back, Saudia Arabia poured in $2 billion to help Pakistan’s foreign exchange reserves. It was in two equal installments in October and November. $1 billion is still expected in January out of the $ 3 billion the Gulf Nation had promised us.
UAE Crown Prince Muhammad bin Zayed and Saudi Crown Prince Mohammad bin Salman will visit Islamabad. It will be in January and February, respectively. Both will announce mega investment plans.
In this fiscal year, the rupee lost 14.4pc value against the dollar. It came down to Rs 138.95 a dollar from Rs 121.50. In 2017-18, it saw 15.9pc depreciation as the current account deficit increased to $18bn from $12.6bn a year earlier. In the first five months of this fiscal year, the current account deficit came down to $6bn from $6.8bn a year ago.
It is major that the government unveils the exact classification of financial support from the helping countries. Unless we, as a nation know on what terms and condition it is getting the foreign funding and how the country will return the favor, the market cannot have full confidence in the temporary stability in the exchange rates.