By Azam Tariq

The State Bank of Pakistan's (SBP) decision to introduce Naya Pakistan Certificates (NPCs) in Saudi riyals (SAR) and UAE dirhams (AED) is expected to attract greater investment from overseas Pakistanis in the Gulf by eliminating currency conversion risks and making investment more convenient, experts say.

The move comes as Pakistan's remittance inflows continue to reach record levels. During the first 11 months of fiscal year 2025-26 (11MFY26), workers' remittances rose to $38.1 billion, up 9.2% from the same period last year, with Saudi Arabia and the UAE remaining Pakistan's two largest remittance corridors, according to SBP data.

In May 2026 alone, remittances from Saudi Arabia stood at $1.025 billion, while inflows from the UAE reached $1.007 billion, together accounting for nearly half of the month's total remittances.

Against this backdrop, offering investment instruments in the currencies most Gulf-based Pakistanis earn and save in is viewed as a natural step in strengthening the country's engagement with its overseas workforce.

Speaking with Wealth Pakistan, Dr Vaqar Ahmed, an Islamabad-based senior economist, said the introduction of SAR- and AED-denominated certificates removes one of the key barriers preventing Gulf-based workers from investing more actively in Pakistan.

"Previously, these workers had to worry about the rupee losing value or deal with the hassle of converting their money into US dollars. Now, they can invest their hard-earned money in the exact same currency they get paid in while earning an attractive return," he said.

He noted that the initiative simplifies investment decisions for overseas Pakistanis and could help Pakistan tap a larger share of savings currently parked in Gulf banking systems.

Under the SBP's latest circular, conventional NPCs will now be available in SAR and AED alongside the existing US dollar, British pound, euro and Pakistani rupee-denominated certificates.

Returns on the new Gulf-currency certificates range from 6.5% for three months to 7.5% for five years. Since the launch of the Roshan Digital Account (RDA) initiative in 2020, total inflows have reached $12.746 billion, with more than 62% invested in NPCs, according to SBP EasyData.

However, Dr Ahmed cautioned that while diaspora-funded instruments provide valuable support for external-sector stability, they should not be viewed as a long-term substitute for broader economic reforms.

"On the plus side, money from overseas Pakistanis is generally more stable than foreign portfolio investment, which can leave quickly during periods of uncertainty. However, paying relatively high returns in foreign currency can become costly over time," he said.

He described the certificates as an effective tool for easing short-term financial pressures but stressed that sustainable economic stability would ultimately require stronger exports, higher foreign direct investment and improvements in Pakistan's trade balance.

Meanwhile, Yahya Mohiuddin, an equity researcher at Ismail Iqbal Securities, told Wealth Pakistan that the introduction of riyal- and dirham-denominated NPCs is well aligned with Pakistan's remittance profile.

"In 11MFY26, approximately 23% of total remittances came from Saudi Arabia and 21% from the UAE, reflecting the strong earning and saving capacity of Pakistanis living in these countries. Offering NPCs in SAR and AED would help address currency conversion concerns and improve ease of investment for overseas Pakistanis," he said.

Mohiuddin noted that Gulf-currency NPCs could help transform a portion of recurring remittance flows into longer-term investment inflows, thereby providing a more stable source of foreign exchange.

Since remittances from Saudi Arabia and the UAE already account for a substantial share of Pakistan's external inflows, he said dedicated investment products in those currencies could broaden the investor base and encourage greater use of formal financial channels.

Experts believe the introduction of SAR- and AED-denominated NPCs could help convert a portion of Pakistan's large remittance inflows into longer-term investment capital. However, they stress that sustained external-sector stability will ultimately depend on stronger exports, increased foreign direct investment and broader economic reforms that reduce reliance on external borrowing.

Credit: INP-WealthPk