Tag: financial news

  • Pakistan Stock Exchange gains over 2,300 points on revived investor confidence after signing IMF agreement

    Pakistan Stock Exchange gains over 2,300 points on revived investor confidence after signing IMF agreement

    The Pakistan Stock Exchange (PSX) experienced a substantial increase of over 2,300 points on Monday, fueled by renewed investor confidence after the signing of a staff-level agreement between Pakistan and the International Monetary Fund (IMF) on Friday.

    At 12:00 pm, the benchmark KSE-100 index of the Pakistan Stock Exchange surged by 2,381 points, currently trading at 43,833 points.

    Market experts attribute this bullish trend in the PSX to the revival of the loan programme with the international lender.

    Last week, Pakistan officially signed a staff-level agreement worth $3 billion with the International Monetary Fund (IMF). The signing ceremony took place in Lahore and was attended by Prime Minister Shehbaz Sharif, Finance Minister Ishaq Dar, and Information Minister Marriyum Aurangzeb.

    The International Monetary Fund (IMF) announced the successful completion of a “Stand-By Arrangement” between the global financial institution and Pakistan.

    The staff-level agreement, valued at $3 billion for a duration of 9 months, was reached through virtual negotiations conducted by IMF Mission Chief Nathan Porter and his team, who maintained continuous communication with Pakistani authorities.

    The final approval of this agreement will be granted by the IMF’s executive board, expected to occur in mid-July. Once approved, Pakistan will be eligible to receive the $3 billion loan.

  • Pakistani rupee maintains winning streak against dollar for third day to close at Rs286.73

    Pakistani rupee maintains winning streak against dollar for third day to close at Rs286.73

    The Pakistani rupee continued its upward trend against the US dollar for the third consecutive session in the inter-bank market on Thursday, appreciating by 0.09 per cent. According to the State Bank of Pakistan (SBP), the currency settled at Rs286.73 at the close, showing an improvement of Rs0.25 compared to the previous day’s rate of Rs286.98.

    In a significant development, Finance and Revenue Minister Ishaq Dar met with US Ambassador to Pakistan Donald Blome on Wednesday to discuss the economic ties between Pakistan and the United States, as well as the International Monetary Fund (IMF) loan program.

    This meeting took place following the IMF’s criticism of Islamabad’s budget proposals for the fiscal year 2023-24. Esther Perez Ruiz, the IMF’s Resident Representative for Pakistan, expressed dissatisfaction with the budget proposals, describing them as a missed opportunity to broaden the tax base. She also criticised the new amnesty scheme, stating that it sets a damaging precedent.

    Separately, Prime Minister Shehbaz Sharif stated on Wednesday that the immediate goal, with the assistance of the Special Investment Facilitation Council (SIFC), is to increase Foreign Direct Investment (FDI) in the country to $5 billion.

    On the international front, the US dollar remained close to a one-month low against a basket of currencies on Thursday. This followed Federal Reserve Chair Jerome Powell’s testimony, where he maintained his usual stance and offered little room for surprise.

    Powell’s comments to lawmakers on Capitol Hill aligned with the central bank’s previous policy meeting, indicating that further rate increases are likely if the economy continues its current trajectory. As a result, the greenback depreciated by nearly 0.5 per cent against six major peers in the previous session.

    Meanwhile, oil prices slightly declined on Thursday. Market expectations of further interest rate hikes were balanced by potentially bullish US oil inventory data, which indicated a decrease in stocks.

  • Pakistani rupee gains ground as State Bank eases cross-border transaction rules

    Pakistani rupee gains ground as State Bank eases cross-border transaction rules

    In a significant turn of events, the Pakistani rupee experienced a notable appreciation against the US dollar in the open-market on Thursday.

    The value of the US dollar dropped to the range of Rs295-300, compared to the previous day’s rate of Rs314. This shift can be attributed to recent changes implemented by the State Bank of Pakistan (SBP) to facilitate cross-border transactions.

    Currency dealers consulted by Business Recorder acknowledged that the supply of US dollars remains limited in the market, as customers are not actively selling their currency. This scarcity could be a contributing factor to the rupee’s recent surge in value.

    According to experts, the recent development is a direct result of the SBP’s decision to allow credit card payments through banks. The SBP, on Wednesday, permitted banks to purchase US dollars from the interbank market for settling card-based cross-border transactions with International Payment Schemes (IPSs).

    Previously, the SBP guidelines only permitted authorized dealers to purchase US dollars from exchange companies for settling card-based cross-border transactions with IPSs such as Visa and MasterCard.

    However, in response to stakeholder feedback, the SBP opted to extend this privilege to banks, allowing them to source dollars from the interbank market for such transactions.

  • Budget 2023-24: FBR considers decreasing duty on mobile phones

    Budget 2023-24: FBR considers decreasing duty on mobile phones

    The Federal Board of Revenue (FBR) is considering options to decrease the duty on mobile phones in the forthcoming federal budget for the fiscal year 2023-24. The budget is expected to be disclosed on June 9. The FBR is taking into account the suggestions put forward by mobile phone traders.

    Previously, the government was obligated to raise the duty on mobile phones by 100 per cent to 150 per cent, resulting in a deposit of only Rs5 billion to Rs10 billion in the national exchequer, instead of the anticipated Rs85 billion.

    According to The News, the number of mobile phone users in Pakistan has surpassed 186.9 million. To address the financial crisis of the current fiscal year, the new budget is contemplating a significant reduction in the rates of duties on cellular phones. Currently, the duties on small and big mobile phones stand at approximately 100 per cent to 150 per cent.

    The mobile industry is teetering on the verge of collapse due to the increased taxes. This not only affects traders but also poses difficulties for millions of people who rely on earning a livelihood through this sector.

    It has been reported that a delegation from the Mobile Phones Traders Association has submitted recommendations to Finance Minister Ishaq Dar and other senior officials. The delegation has assured that efforts will be made to incorporate these recommendations into the budget. The proposals and recommendations are currently under review for potential inclusion in the new budget.

    It has come to light that a 75 per cent duty is imposed on cellular phones in Pakistan, in contrast to other countries in the region such as Singapore, Bangladesh, and Turkey, where the duty is not as high. Consequently, people have been using smartphones without paying duties in collusion with the FBR.

    The additional 100 per cent to 150 per cent duty on cell phones has made them unaffordable for the poor, laborers, daily wage earners, students, professionals, the legal community, and civil society.

    Munir Beg Mirza, the General Secretary of the All Pakistan Mobile Phones Traders Association, stated that the ban on importing used mobile phones has led to an increase in smuggling to favor a few companies. Additionally, people are illegally using smartphones without paying substantial taxes, thus causing a loss to the national treasury.

    He further noted that if an appropriate duty is imposed in the new financial year, not only will every consumer pay tax, but the government will also receive Rs100 billion instead of Rs5 billion in revenue from phones.

  • Honda Pakistan reports 90% drop in profits, reflecting struggling state of auto industry

    Honda Pakistan reports 90% drop in profits, reflecting struggling state of auto industry

    Honda Atlas Cars Pakistan Limited (HACPL), one of the leading car manufacturers in the country, reported a significant decline of 90 per cent in its annual net profit due to rising expenses, reflecting the struggling state of the auto industry and the country’s economy.

    The company’s net profit for the fiscal year ending on March 31 was reported to be Rs260.141 million, a sharp decrease from Rs2.509 billion in the previous year.

    Consequently, the company did not distribute any dividends for that period. Earnings per share also witnessed a decline, coming in at Rs1.82/share compared to Rs17.58/share in the previous year.

    Honda Atlas Cars stated that its revenue for the year dropped to Rs95.087 billion, down from Rs108.047 billion the previous year. The cost of sales remained relatively stable at Rs87.926 billion compared to Rs102.515 billion during the same period last year. On the other hand, the company’s other income increased to Rs2.321 billion, compared to Rs2.004 billion in the previous year.

    However, the company experienced a surge in other expenses, which rose to Rs4.929 billion from Rs984.045 million, adversely impacting profit margins.

    Arif Habib Ltd, a brokerage firm, attributed the significant decline in profit to lower volumetric sales and increased finance costs, which rose by 6.5 times on a year-on-year basis. The auto industry, which heavily relies on imports, has been severely affected by the country’s economic conditions.

    Honda was among the manufacturers that had announced plant closures. However, on May 16, it was reported that Honda Atlas Cars planned to resume production activities after a months-long halt. The decision was made following an improvement in the accessibility of trade finance facilities for the supply chain.

    The government of Pakistan, facing low foreign exchange reserves, implemented stringent measures, including restrictions on letters of credit (LCs) for the import of completely knocked down (CKD) units and raw materials used by the auto industry.

    According to Geo, Honda stated that with the company’s consistent efforts and the slight improvement in trade finance accessibility, they are now preparing to gradually resume production in the coming weeks.

    Since March 9, the company had suspended its production activities. The auto industry has encountered significant setbacks due to non-production days, reduced consumer affordability resulting from higher interest rates and vehicle prices, currency devaluation, and escalating petrol prices. These plant shutdowns have also led to layoffs in the industry.

  • Pakistani rupee gains against US dollar amidst hopes for IMF deal

    Pakistani rupee gains against US dollar amidst hopes for IMF deal

    Pakistani rupee on Monday gained against the US dollar due to two key developments: the country secured $500 million from the Industrial and Commercial Bank of China and there was optimism around a potential deal with the International Monetary Fund (IMF).

    During intraday trading, the local currency witnessed an increase of Rs3.46 against the greenback in the interbank market, with the exchange rate at around 11:45 pm being Rs275.

    However, last week the rupee made even greater gains against the US dollar. The State Bank of Pakistan reported a 2.38 per cent appreciation, equivalent to Rs6.63, in the interbank market, with the local unit closing at Rs278.46 on Friday.

    According to the General Secretary of the Exchange Companies Association of Pakistan (ECAP), Zafar Paracha, the hype around the earlier dollar appreciation was caused by the country’s financial institutions and international players manipulating rates.

    Paracha noted that the destabilized currency damages Pakistan’s image and discourages foreign direct investment and local investors. He anticipated that with the IMF agreement and inflows from friendly countries, the dollar should remain in the range of Rs260 to Rs265.

    He also highlighted that Pakistan’s political condition has been impacting the dollar rates, which is a new phenomenon. He mentioned that increasing Pakistan’s tax base, not tax rates, is crucial, and the government should reduce expenditures and subsidies given to elites.

    According to Geo, there is hope for a deal with the IMF, with a government official expressing optimism about striking a deal, and another official expecting to reach a staff-level agreement with the IMF in the coming days, although the Fund has not provided a timeframe for finalizing the agreement.