Tag: Forex

  • Pakistani rupee finally ends 28-day winning streak, loses against US dollar

    Pakistani rupee finally ends 28-day winning streak, loses against US dollar

    The Pakistani rupee’s remarkable 28-day winning streak against the US dollar came to an end today, as it recorded losses following an initial trade opening at Rs278.5 in the interbank market.

    In the morning, the rupee had steadied, maintaining a level of Rs276 against the greenback. Subsequently, between 1:00 PM and 2:35 PM, the interbank rate dipped to Rs278 before settling at Rs277 for the rest of the day. 

    Open market rates, observed across various currency exchange counters, ranged from Rs277 to Rs279 throughout the day.

    At the close of the trading day, the PKR experienced a depreciation of 0.07 per cent, concluding at Rs277.03 after losing 20 paisas against the US dollar.

    Despite today’s setback, it is noteworthy that the disparity between interbank and open market rates has significantly decreased by Rs60 since September 4th. The rates have fluctuated between as low as Rs277 and sporadic spikes up to Rs280 today.

  • Pakistani rupee appreciates by Rs5.07 against US dollar in five days 

    Pakistani rupee appreciates by Rs5.07 against US dollar in five days 

    The Pakistani rupee (PKR) showed a notable increase in value against the US dollar (USD), appreciating by 5.07 PKR in five days to reach a closing rate of 277.62 PKR per USD on Friday. This stands in contrast to the previous week’s closing rate of 282.69 PKR per USD.

    In today’s interbank trading session, the local currency exhibited a gain of 96 paisa. It reached an intraday high (bid) of 278.5 PKR and a low (ask) of 287.55 PKR.

    In the open market, exchange companies adjusted their rates, with the rupee strengthening by 1 PKR. These companies quoted the dollar at 274 PKR for buying and 277 PKR for selling, as opposed to the prior rates of 275 PKR for buying and 278 PKR for selling.

    This increase in the value of the rupee can be attributed to several factors. Notably, there has been a concerted effort, backed by the military, to curtail illegal outflows of US dollars from the country.

    Additionally, the government has implemented various measures aimed at bolstering the local currency.

    Addressing concerns related to Afghan transit trade, Pakistan’s Ministry of Commerce recently took a significant step by imposing a ban on 212 items that were previously imported into Afghanistan through Pakistan under the Afghan transit trade agreement.

    This move, enacted through a Statutory Regulatory Order (SRO) issued on October 3, was executed in accordance with the authority granted by the Imports and Exports (Control) Act of 1950.

    Furthermore, the Federal Board of Revenue (FBR) has imposed a 10% processing fee on five key categories of Afghan transit commercial goods imported into Afghanistan via Pakistan.

    In parallel, the State Bank of Pakistan has introduced recent reforms aimed at consolidating and redefining various types of exchange companies into a single category. These changes come with well-defined mandates and higher capital requirements, ultimately contributing to a more transparent financial landscape.

  • Pakistan’s foreign exchange reserves increase by $31 million, reaching $7.64 billion

    Pakistan’s foreign exchange reserves increase by $31 million, reaching $7.64 billion

    The State Bank of Pakistan (SBP) reported an increase of $31 million in its foreign exchange reserves on a weekly basis, reaching a total of $7.64 billion as of October 6, according to data released on Thursday.

    The overall liquid foreign reserves of the country amounted to $13.03 billion, with commercial banks holding net foreign reserves of $5.39 billion.

    The central bank did not provide a specific explanation for the increase in reserves.

    In its report, the SBP stated, “During the week ending on October 6, 2023, the SBP’s reserves rose by $31 million, reaching $7,646.7 million.”

    Notably, the previous week witnessed a decrease of $21 million in Pakistan’s central bank reserves.

    In July of this year, the SBP’s reserves received a significant boost when Pakistan received the first tranche of approximately $1.2 billion from the International Monetary Fund (IMF) after the approval of a new $3-billion stand-by arrangement. Additionally, inflows from Saudi Arabia and the UAE contributed to the growth of reserves.

    However, it’s worth mentioning that the central bank’s reserves have been under pressure due to ongoing debt repayments, an increase in import expenditures following the relaxation of restrictions, and a lack of fresh inflows.

  • US dollar hits six-month low against Pakistani currency 

    US dollar hits six-month low against Pakistani currency 

    The Pakistani rupee (PKR) has been on an upward trajectory, with the US dollar (USD) experiencing its lowest value in six months.

    This development follows a concerted effort to combat dollar smuggling, resulting in a decrease of Rs5.50 in interbank trading this week. The greenback concluded the week at Rs282.69.  

    In the open market, the US dollar saw a significant drop of 6.50 rupees, closing at Rs281.50, down from Rs288.

    This decline has been a consistent trend in recent weeks, starting from the beginning of September, when the US currency has been steadily losing ground against the Pakistani rupee.  

    Notably, other foreign currencies have also seen a decrease in their value within the currency market. Over the past week, the Euro fell by 8 rupees, going from Rs306 to Rs298. Similarly, the British Pound Sterling lost Rs5, reaching a rate of Rs248 from its previous Rs253.

    The Saudi Riyal experienced a modest decrease of one rupee, moving from Rs76.20 to Rs75.20, while the Emirates dirham shed Rs2.60 to settle at Rs77.20, down from its previous rate of Rs79.80 over the weekend.  

    This strengthening of the Pakistani rupee against the US dollar in the open market has occurred while maintaining a narrow gap with the interbank market, aligning with the limits stipulated by the International Monetary Fund (IMF).  

    This positive trend in the rupee’s value against the dollar can be attributed to a nationwide crackdown on illegal currency operations carried out by law enforcement agencies. 

  • Pakistan’s forex reserves decline by $59 million to $7.64 billion due to debt payments

    Pakistan’s forex reserves decline by $59 million to $7.64 billion due to debt payments

    The State Bank of Pakistan (SBP) reported a weekly decrease in foreign exchange reserves, with a decline of $59 million, bringing the total to $7.64 billion as of September 22, according to data released on Thursday.

    The overall liquid foreign reserves of the country amounted to $13.16 billion, with commercial banks holding net foreign reserves of $5.52 billion.

    The central bank attributed this reduction in reserves to debt repayments, stating, “During the week ending on September 22, 2023, SBP’s reserves decreased by $59 million to $7,636.7 million due to debt repayments.”

    Notably, Pakistan’s central bank reserves had increased by $56 million the previous week, following four consecutive weeks of decline, during which SBP reserves had dwindled by a cumulative total of $416 million.

    In July, SBP’s reserves received a boost when Pakistan received approximately $1.2 billion as the first tranche from the International Monetary Fund (IMF), following approval of a new $3-billion stand-by arrangement. Additionally, inflows from Saudi Arabia and the UAE contributed to the increase.

    Despite these positive developments, the central bank’s reserves have come under pressure due to ongoing debt repayments, increased import payments following the easing of restrictions, and a lack of fresh inflows.

  • SBP-held forex reserves rise by $12 million to $8.05 billion, sufficient to cover over two months’ worth of imports

    SBP-held forex reserves rise by $12 million to $8.05 billion, sufficient to cover over two months’ worth of imports

    The State Bank of Pakistan (SBP) announced a rise of $12 million in its foreign exchange reserves, reaching $8.05 billion, as detailed in a statement released on Thursday. The nation’s overall liquid foreign reserves, encompassing both SBP and commercial banks, amounted to $13.379 billion as of August 11. Among these, commercial banks held net reserves totaling $5.3237 billion, as reported by the SBP.

    While the central bank did not provide specifics on the cause behind the augmentation of foreign exchange reserves, the situation presents an upbeat stance. Nevertheless, it’s worth noting that the existing reserves would barely cover imports for a span slightly exceeding two months.

    Notably, the previous month saw a notable escalation in SBP reserves due to inflows from the United Arab Emirates, Saudi Arabia, and the International Monetary Fund (IMF), following the formalisation of a $3 billion Stand-by Arrangement (SBA) with the global financial institution.

    According to Geo, in a departure from market predictions, the SBP opted to maintain the key policy rate at 22 per cent during the preceding month. This stance diverged from expectations, particularly those guided by IMF recommendations. SBP Governor Jameel Ahmed conveyed this decision following a Monetary Policy Committee (MPC) meeting. Explaining the rationale, he stated that given the decline in inflation, there was no inclination to increase the interest rate.

    During a press conference, Governor Ahmed also shared insights into the nation’s economic trajectory. He projected a growth rate ranging from 2 per cent to 3 per cent for the upcoming year. Highlighting the government’s actions, he mentioned the complete removal of import restrictions. This move, coupled with financial inflows from the IMF and other supportive nations, led to a $4.2 billion upswing in Pakistan’s foreign exchange reserves in July.

  • Pakistani rupee drops to Rs295 against US dollar

    Pakistani rupee drops to Rs295 against US dollar

    It appears that the Pakistani rupee is poised to shatter previous records and reach an new all-time low, as the local currency continued its decline against the US dollar on Wednesday, decreasing by 1.16 per cent in the inter-bank market.

    By the end of the day, the rupee settled at Rs294.93 against the US dollar, marking a decline of Rs3.42, as reported by the State Bank of Pakistan (SBP).

    This represents its lowest point since May 11 of this year, when it hovered near Rs299.

    Just one day prior, on Tuesday, the rupee also experienced a setback against the US dollar, concluding at Rs291.51.

  • Fitch and Moody’s: IMF loan provides temporary relief for Pakistan, but risks remain

    Fitch and Moody’s: IMF loan provides temporary relief for Pakistan, but risks remain

    Fitch Ratings and Moody’s Investors Service issued warnings on Monday regarding Pakistan’s financial sustainability, despite the recent acquisition of a much-needed $3 billion lifeline from the International Monetary Fund (IMF).

    Last week, Pakistan signed a short-term (nine-month) loan programme worth $3 billion with the IMF, as the previous $7 billion programme was prematurely ending on the same day.

    The objective of the new loan programme is to provide the necessary foreign exchange to reopen imports, support listed companies in gradually resuming partially closed production, and stimulate economic activities within the country.

    Additionally, this programme serves as a signal to other donor agencies and friendly nations, which had pledged $9 billion at a Geneva meeting in January 2023, to extend new financing to Islamabad.

    However, the two global rating agencies caution that risks persist for Pakistan’s economy, particularly as the government faces a daunting $25 billion debt repayment challenge in the upcoming year starting in July.

    Krisjanis Krustins, Fitch’s Director of Sovereigns for APAC, emphasised that Pakistan will require significant additional financing beyond IMF disbursements to meet its debt obligations and support an economic recovery.

    While the IMF likely sought and received assurances for such financing, there remains a risk that it could prove insufficient, especially if current account deficits widen again.

    In order to secure the initial agreement with the IMF, Pakistan had to implement measures such as tax increases, spending cuts, and raising its primary interest rate to a historical peak.

    Although the markets responded positively to this initial agreement, leading to a significant surge in stocks and improved performance of dollar bonds, it still awaits approval from the IMF Executive Board.

    Moody’s analyst Grace Lim, based in Singapore, expressed doubts about Pakistan’s ability to secure the full $3 billion IMF financing during the stand-by period of the loan programme. Lim stated that it remains uncertain whether the Pakistani government will be able to secure the complete amount.

    Furthermore, she highlighted that the government’s commitment to implementing ongoing reforms will be tested as the country approaches elections scheduled for October 2023.

    It is worth noting that Pakistan had previously obtained a $1.1 billion loan in August, which was subsequently halted due to Islamabad’s failure to comply with certain stipulated conditions.

    According to Moody’s, the towering $25 billion debt repayment comprises both principal and interest, amounting to nearly seven times Pakistan’s foreign exchange reserves.

    Lim further added that only after the elections will it become clear whether the country will be able to enter into another IMF programme.

    Until a new programme is agreed upon, Pakistan’s ability to secure loans from other bilateral and multilateral partners in the long term will be severely limited, she cautioned.

  • Pakistan commits to boost foreign exchange reserves to $11.7 billion by 2024

    Pakistan commits to boost foreign exchange reserves to $11.7 billion by 2024

    Pakistan has made a commitment to the International Monetary Fund (IMF) to significantly increase its gross foreign exchange reserves by $7.65 billion. The goal is to raise the reserves to $11.7 billion by the end of the financial year 2024, up from the current level of $4.056 billion in the financial year 2023. This move is aimed at building a buffer of foreign exchange reserves to protect the national economy from external shocks.

    The assurance was given through a Letter of Intent (LoI) signed by Finance Minister Ishaq Dar and State Bank of Pakistan (SBP) Governor Jameel Ahmed. Under a $3 billion stand-by arrangement (SBA) for nine months, Pakistan assured the IMF and its executive board of its commitment to bolster its foreign exchange reserves.

    If the gross foreign exchange reserves reach $11.7 billion by the end of June 2024, they will be sufficient to meet the country’s import requirements for goods and services for approximately 1.8 months.

    The balance of payment (BoP) chart, agreed upon by the IMF and Pakistan, indicates that projected disbursements of foreign loans during the current financial year 2023-24 are expected to amount to $15.01 billion from multilateral and bilateral creditors. This financial year started on July 1, 2023, and will end on June 30, 2024.

    The analysis of the BoP data suggests that Pakistan needs to secure external financing from multilateral and bilateral creditors during the current fiscal year. Additionally, Pakistan is seeking an additional deposit of $2 billion from the Kingdom of Saudi Arabia and $1 billion from the United Arab Emirates (UAE). The Islamic Development Bank (IsDB) has agreed to provide a $1 billion loan program.

    Furthermore, Pakistan is actively working on program loans and project financing from the World Bank, Asian Development Bank, and Asian Infrastructure Investment Bank (AIIB) to secure a total disbursement of $15 billion from all multilateral and bilateral sources.

    To further strengthen its reserves, Pakistan intends to engage with bilateral partners, especially China, Saudi Arabia, and the UAE, to extend the maturity of their existing deposits, which amount to $2 billion, $3 billion, and approximately $2 billion, respectively, in the current financial year.

    The IMF executive board is scheduled to convene on July 12, 2023, in Washington DC, to review and consider Pakistan’s request for approval of a $3 billion short-term bailout package, including a $1 billion tranche release. Upon approval by the executive board, the $1 billion tranche will be disbursed within a few days.

    The IMF staff has already circulated copies of the Letter of Intent among the executive board members. In this document, Finance Minister Ishaq Dar and the SBP governor have provided assurances regarding the implementation of crucial fiscal and energy reforms to address fiscal challenges. Islamabad has also committed to tackling issues in the energy sector, including measures to control the circular debt problem.

    To address energy sector concerns, the government plans to raise power and gas tariffs in line with the determinations made by the regulators. The National Electric Power Regulatory Authority (NEPRA) will finalise the power tariff, while the facts regarding gas tariffs are being ascertained by relevant officials.

    The Oil and Gas Regulatory Authority (OGRA) has already recommended increasing gas tariffs by 45 per cent and 50 per cent for two major gas utilities. The government has a 40-day timeframe to make a decision on this matter, after which the recommendations will be notified in the second week of July 2023.

    Under the nine-month SBA program, it is anticipated that there will be two reviews conducted by the IMF mission in September and December 2023. Each review is expected to lead to the disbursement of a $1 billion installment.

    Overall, Pakistan is taking significant measures to strengthen its foreign exchange reserves, seek external financing, and implement necessary reforms in order to address its economic challenges and ensure stability.

  • PM Shehbaz urges IMF to release stalled funds, assures compliance with conditions

    PM Shehbaz urges IMF to release stalled funds, assures compliance with conditions

    On Thursday, Prime Minister (PM) Shehbaz Sharif had a meeting with Kristalina Georgieva, the Managing Director of the International Monetary Fund (IMF), where he urged the lender to release the stalled funds for Pakistan. He assured the IMF of Pakistan’s compliance with all the conditions set by the lender.

    The meeting took place during the Summit for a New Global Financial Pact held in Paris, emphasising Pakistan’s commitment to fulfilling its promises.

    During the meeting, the two leaders discussed the ongoing programmes and cooperation between Pakistan and the IMF. The prime minister briefed Georgieva on Pakistan’s economic outlook, highlighting the government’s efforts for economic growth and stability.

    He emphasised that all the necessary actions for the 9th review under the Extended Fund Facility (EFF) had been completed, and Pakistan was fully dedicated to meeting its obligations as agreed with the IMF.

    The prime minister expressed his hope for the timely release of the funds allocated under the EFF, as it would contribute to Pakistan’s ongoing efforts in economic stabilisation and provide relief to the people.

    Georgieva shared the IMF’s perspective on the ongoing review process and acknowledged the meeting as an opportunity to assess the progress made in that context.

    It is crucial to note that Pakistan’s currency reserves are currently sufficient to cover only one month’s worth of imports. The country had expected $1.1 billion of the funds to be released in November, but the IMF has imposed certain conditions before making further disbursements.

    With only one IMF board review remaining before the end of the $6.5 billion EFF programme, Pakistan is expected to present a budget aligned with the programme objectives, restore proper functioning of the foreign exchange market, and bridge the $6 billion gap before the board review.