Tag: Market Expectations

  • Pakistani rupee extends winning streak against US dollar for 12th straight session

    Pakistani rupee extends winning streak against US dollar for 12th straight session

    The Pakistani rupee continued its upward trend against the US dollar for the 12th consecutive session, appreciating by 0.1 per cent in the inter-bank market on Thursday. 

    The State Bank of Pakistan reported that the rupee settled at Rs281.93, marking an increase of Re0.27. A day earlier, the rupee had experienced a slight gain, closing at Rs282.20 against the US dollar.

    In a related development, the Ministry of Finance acknowledged the persistent challenge of higher markup payments. The ministry stressed the importance of both revenue enhancement and prudent expenditure control.

    Internationally, the US dollar faced substantial losses on Thursday, poised for a yearly decline after two years of robust gains. 

    Anticipation of interest rate cuts from the Federal Reserve in the coming year influenced market sentiments. As the year concludes, limited market activity is expected until the New Year due to thin liquidity.

    The dollar index, measuring the US currency against six rivals, reached a five-month low of 100.81. It declined by 0.5 per cent on Wednesday and is on track for a 2.6 per cent decrease this year, breaking a two-year trend of strong gains. I

    Investors are closely monitoring the timing of potential interest rate cuts from the Fed, with markets indicating an 89 per cent chance of a cut in March 2024, according to the CME FedWatch tool. Futures suggest up to 158 basis points of Fed easing in the coming year.

    Oil prices, a significant indicator of currency parity, stabilised on Thursday following a previous sharp decline. 

    Concerns about shipping disruptions along the Red Sea route eased, despite escalating tensions in the Middle East. 

    Brent crude futures rose by 2 cents to $79.75 a barrel, while US WTI crude futures traded 3 cents lower at $74.08 a barrel, rebounding from a nearly 2 per cent drop on Wednesday as major shipping firms resumed operations in the Red Sea.

  • State Bank of Pakistan maintains policy rate at 22% despite inflation concerns 

    State Bank of Pakistan maintains policy rate at 22% despite inflation concerns 

    The Monetary Policy Committee (MPC) of the State Bank of Pakistan (SBP) convened today to deliberate on the prevailing economic conditions and has resolved to maintain the policy rate at 22 per cent for the fourth consecutive meeting. 

    This decision aligns with market expectations, as a majority of market participants were in agreement regarding the rate remaining unchanged. 

    The Monetary Policy Statement issued by the central bank indicates that the decision takes into consideration the impact of the recent increase in gas prices on November’s inflation, which exceeded the MPC’s earlier projections.  

    The Committee acknowledged the potential implications of this on the inflation outlook while also noting offsetting factors such as the recent decline in international oil prices and the improved availability of agricultural produce. 

    Additionally, the Committee conducted an assessment indicating that the real interest rate remains positive over a 12-month forward-looking horizon and anticipates a downward trajectory for inflation. 

    Key developments since the October meeting were considered by the MPC. Firstly, the successful completion of the staff-level agreement for the first review under the IMF SBA programme, which is expected to unlock financial inflows and enhance the SBP’s foreign exchange serves, 

    Secondly, the quarterly GDP growth for Q1–FY24 met the MPC’s expectations for a moderate economic recovery. 

    Lastly, consumer and business confidence surveys reflected positive sentiment improvements. Lastly, core inflation persists at elevated levels, showing a gradual reduction. 

    Considering these developments, the Committee determined that the existing monetary policy stance is conducive to achieving the inflation target of 5-7 per cent by the end of FY25. 

    The Committee emphasised that this assessment is contingent on the sustained implementation of targeted fiscal consolidation and the timely realisation of planned external inflows.