Tag: rupee

  • Gold price in Pakistan hits new record high of Rs214,500 per tola

    Gold price in Pakistan hits new record high of Rs214,500 per tola

    Tuesday saw a historic moment for Pakistan as the price of gold soared to an all-time high, hitting Rs214,500 per tola (11.66 grammes). The cause of this surge was multifaceted, with the global market’s uptrend playing a part, alongside the rupee’s historic low against the US dollar in the interbank trade.

    The rupee had plummeted to a never-before-seen low of Rs287.29 against the US dollar in the interbank market, and the surge in gold prices was a reflection of this movement. The ripple effect was felt across the country as traders scrambled to adjust to the new reality of the local bullion market.

    In a surge that grabbed headlines across Pakistan, the price of 24-carat gold soared to an all-time high on Tuesday, hitting Rs214,500 per tola and Rs183,900 per 10 grams, according to the All-Pakistan Sarafa Gems and Jewellers Association (APSGJA). It was a clear reflection of the rupee’s movement, which had plummeted to a historic low of Rs287.29 against the US dollar in the interbank market, as well as an uptrend in global markets.

    As inflation rates in Pakistan reached a nearly all-time high of 35.4 per cent in March, people felt the pinch of rising consumer prices on their budgets, prompting them to turn to gold. This precious commodity has always been considered a hedge against inflation, with its value increasing as the purchasing power of the dollar declines. During the two-day period from Monday to Tuesday, gold gained Rs5,200 per tola.

    Economic tensions have been on the rise, with the International Monetary Fund (IMF) scrutinizing external financing commitments from friendly countries before releasing bailout funds. The delay in the revival of the program had a negative impact on the currency market, which, in turn, fueled demand for gold. Investors’ attention turned to this precious commodity as a safe haven in these uncertain times.

  • Gold price in Pakistan increases to Rs209,500 per tola on weak rupee and global trends

    Gold price in Pakistan increases to Rs209,500 per tola on weak rupee and global trends

    Gold prices in Pakistan increased on Monday, following global trends and a potential boost from a weakening rupee. As a result, yellow metal became more expensive, prompting traders to be cautious on the eve of a monetary policy meeting. According to data released by the All-Pakistan Sarafa Gems and Jewellers Association (APSGJA), the price of 24-carat gold increased by Rs1,200 per tola and Rs1,028 per 10 grams, settling at Rs209,500 and Rs164,645 respectively.

    In the inter-bank market, the rupee depreciated 0.44 per cent against the dollar on Monday, settling at 285.04, a loss of Rs1.25 according to the State Bank of Pakistan (SBP). As inflation in Pakistan spirals out of control, the SBP is expected to raise the policy rate by 100-200 basis points. In March, consumer price inflation in Pakistan rose to a record 35.37 per cent from the previous year.

    Gold is commonly viewed as a hedge against inflation, increasing in value as the purchasing power of the dollar decreases. In Pakistan, March’s monthly inflation surpassed predictions, reaching almost an all-time high of 35.4 per cent compared to the previous year. This has resulted in many individuals experiencing financial difficulty as the cost of living continues to outstrip average incomes. Last month, the central bank raised the policy rate by 300 basis points to 20 per cent.

    On Monday, world gold prices rebounded as the dollar trimmed its initial gains, which were driven by bets that OPEC’s surprise output cuts could raise global energy prices and cause central banks to increase interest rates. Spot gold increased by 0.5 per cent to $1,977.43 per ounce by 1206 GMT, with US gold futures gaining 0.4 per cent to $1,994.50. Earlier in the session, gold hit a one-week low of $1,949.54.

    However, when interest rates are raised to curb rising price pressures, the appeal of gold as an asset diminishes as it does not pay interest. In the domestic market, silver prices increased by Rs80 per tola and Rs68.59 per 10 grams, settling at their all-time highs of Rs2,350 and Rs2,014.47 respectively. While the international prices of silver fell 0.3 per cent to $24.01 per ounce, platinum was also down 0.3 per cent to $988.60, and palladium rose 0.7 per cent to $1,470.72.

  • Pakistan’s inflation expected to rise due to policy decisions and economic uncertainty, warns Finance Ministry

    Pakistan’s inflation expected to rise due to policy decisions and economic uncertainty, warns Finance Ministry

    Finance Ministry has warned that inflation in Pakistan is set to rise further due to a second-round effect of policy decisions made earlier this year to raise energy and fuel prices, the central bank’s policy rate, and the depreciation of the rupee to secure IMF funding.

    The recent political and economic uncertainties in the country are causing inflationary expectations to rise. The short-term rate of inflation measured by the Sensitive Price Indicator (SPI) hit a record 46.65 per cent last week, while monthly inflation recorded by the Consumer Price Index (CPI) reached 31.6 per cent in February – the highest in six decades.

    The ministry expects inflation to stay at an elevated level due to market frictions caused by the relative demand and supply gap of essential items, exchange rate depreciation, and recent upward adjustments of administered prices of petrol and diesel. Production losses due to floods have not yet been fully recovered, especially those of major agricultural crops. The shortage of essential items has persisted due to these factors.

    Moreover, the delay of stabilisation program has exacerbated economic uncertainty, due to which inflationary expectations have remained strong. The Economic Adviser’s Wing of the finance ministry has also conceded ineffective policy measures and the haplessness of the authorities in containing the inflationary spiral.

    A report from ministry warns that bulk buying during Ramzan might cause the demand-supply gap and result in escalation of essential items prices, although the government is taking steps to ensure a smooth supply of essential items. The report also warned that being largely dependent on prevailing climatic conditions, as witnessed last year, the delay in rains and early heatwave forecast by the Pakistan Met Office in April and May could adversely impact wheat production.

    On a positive note, the report said that despite challenges and uncertainties, the economy was showing continuous signs of resilience as depicted through contained fiscal and current account deficits during the current fiscal year.

  • 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.

  • Pakistani rupee bounces back after steep decline against dollar

    Pakistani rupee bounces back after steep decline against dollar

    During the early hours of trading on Friday, the Pakistani rupee (PKR) saw a significant recovery against the US dollar, with an increase of 4.51 per cent. The inter-bank market quoted the PKR at Rs272.78 by 11:50 am, representing an increase of Rs12.31 against the US dollar.

    This follows a steep decline of 6.66 per cent or nearly Rs19 to settle at an all-time low of Rs285.09 against the US dollar on Thursday.

    On Thursday, the State Bank of Pakistan’s Monetary Policy Committee (MPC) raised the key policy rate by 300 basis points (bps) to 20 per cent, aiming to curb inflation.

    The committee also emphasized the need for energy conservation measures to ease pressure on the external account and meet import requirements. The MPC expects this decision to stabilize inflation expectations and bring it to a medium-term target of 5 per cent-7 per cent by end-FY25.

    Globally, the US dollar eased back from a 2-1/2-month high against the yen on Friday, and weakened toward its first weekly loss since January against major peers. This comes as traders tried to gauge the path for Federal Reserve policy.

    According to Geo, the dollar index, which measures the currency against the yen, euro, and four other major peers, fell 0.11 per cent to 104.85, from its peak of 105.36 earlier this week. The index has decreased by 0.36 per cent since last Friday.

    Meanwhile, oil prices, a critical currency parity indicator, dropped on Friday, but remained poised for a weekly gain due to renewed optimism regarding China’s demand recovery, outweighing concerns over growing crude inventories in the US and tighter monetary policy in Europe.

    This is an intraday update.

  • Pakistani rupee drops by more than Rs18 against US dollar due to delay in IMF deal

    Pakistani rupee drops by more than Rs18 against US dollar due to delay in IMF deal

    Pakistani rupee (PKR) experienced a significant decline of over Rs18.8 against the US dollar in the interbank market during intra-day trade, ahead of the monetary policy review and delay in the International Monetary Fund (IMF) deal.

    At approximately 11:40 am, the greenback was being traded at Rs285 against the local currency, compared to its previous day’s closing of Rs266.11.

    Zafar Paracha, the General Secretary of ECAP, expressed concern over the delay in the agreement with IMF and the lender’s demand to peg the currency rate with that of the grey market, which has resulted in market uncertainty.

    In his opinion, the current rate is too high and should not have risen to this extent. He also noted that the greenback was being traded at Rs290 in the grey market a day earlier.

    Adnan Asghar, a currency market expert, stated that the delay in the deal between Pakistan and the IMF has contributed to the depreciation of the rupee.

    He added that the uncertain political situation has also been a factor in the decline of the rupee’s value. Asghar warned that the country is approaching a default situation due to this delay.

  • Pakistan’s forex reserves increase by 9%, cross $3 billion mark

    Pakistan’s forex reserves increase by 9%, cross $3 billion mark

    After declining for three weeks in a row and losing a cumulative $1,685 million during that period, the foreign exchange reserves held by the State Bank of Pakistan (SBP) have rebounded, according to a statement from the central bank.

    As of February 10, SBP’s foreign currency reserves totaled $3,192.9 million, which is up $276 million from the previous week. This increase represents a gain of over 9 per cent and has broken the streak of declining reserves.

    However, even with this increase, the amount is still only enough to cover one month of imports. Meanwhile, the net forex reserves held by commercial banks are $5,509.3 million, which is $2,316.4 billion more than SBP, bringing the total liquid foreign reserves of the country to $8,702.2 million. The statement did not provide a specific reason for the increase in SBP-held reserves.

    Pakistan’s economy is in dire straits due to a balance-of-payments crisis, political chaos, and deteriorating security. The government has banned all but essential food and medicine imports until it receives a crucial loan tranche from the International Monetary Fund (IMF), which could unlock other sources of funding for the country.

    Inflation has risen sharply, the rupee has declined, and the country is struggling to afford imports, which has caused a severe decline in its industry. Pakistan is no longer issuing letters of credit, except for essential food and medicine, since January, which has led to a backlog of raw material imports that the country can no longer afford.

    According to Geo, the rupee devaluation and the logjam have resulted in a significant decline in manufacturing, including textiles and steel, and building projects.

    While the IMF cash injection alone will not be enough to rescue Pakistan, the government hopes that it will boost confidence and pave the way for other friendly countries like Saudi Arabia, China, and the UAE to offer additional loans.

  • SBP-held foreign exchange reserves drop to a highly critical level of $2.92 billion

    SBP-held foreign exchange reserves drop to a highly critical level of $2.92 billion

    The State Bank of Pakistan (SBP) has reported a decrease in its foreign exchange reserves, as reflected in data released on Thursday. The reserves fell to a total of $2.92 billion, marking a reduction of $170 million.

    According to the recent data, the current level of reserves held by the bank has reached its lowest point since February 2014.

    The country’s total liquid foreign reserves were reported to be at $8.54 billion, according to the latest data. Meanwhile, commercial banks in the country held net foreign reserves of $5.62 billion.

    “During the week ended on February 3, 2023, SBP’s reserves decreased by $170 million to $2,916.7 million due to external debt repayments,” the SBP said in a statement.

    The State Bank of Pakistan (SBP) experienced a substantial decrease in its foreign exchange reserves last week, declining to $3.09 billion, a drop of $592 million. This represents the lowest level of reserves for the central bank since February 2014. The current level of reserves falls below one month’s worth of import coverage.

    The depletion of the central bank’s reserves, which stood at nearly $18 billion at the beginning of 2022, highlights the pressing need for Pakistan to move forward with the next review of its International Monetary Fund (IMF) program.

    These declining reserves serve as a reminder of the economic challenges facing the country and the importance of addressing them in a timely and effective manner.

  • Intraday update: Pakistani rupee drops to all-time low of Rs270 against US dollar

    Intraday update: Pakistani rupee drops to all-time low of Rs270 against US dollar

    According to information provided by the Forex Association of Pakistan (FAP), the Pakistani rupee depreciated by an additional Rs7.4 after falling to a record low last week, trading at Rs270 per dollar in the interbank market at approximately 1:30 pm on Monday.

    From Friday’s close of Rs262.6, this represents a loss of more than 2.5 per cent.

    The decline of the rupee was blamed on a lack of dollars by Zafar Paracha, general secretary of the Exchange Companies Association of Pakistan (ECAP). He said that the dollar supply had not been resumed. Even though there is no agreement, we do not know where the banks will obtain their supplies.

    The SBP deputy governor assured representatives of exchange businesses last week that commercial banks would be instructed to provide money to the exchange companies.

    “There is a lot of panic in the market.” If dollars are received, it will cool down a bit. “As long as the market doesn’t settle, people will not sell their remittances or export proceeds,” Paracha said.

    The current spell of depreciation came after the coalition government ended its control on dollar’s price in order to convince the International Monetary Fund (IMF) officials to revive the $7 billion loan programme.