Tag: Stand-By Arrangement

  • PKR sustains positive momentum, gains 0.04% against US dollar in ninth consecutive session

    PKR sustains positive momentum, gains 0.04% against US dollar in ninth consecutive session

    In the inter-bank market, the Pakistani rupee continued its positive trend against the US dollar for the ninth consecutive session on Monday, appreciating by 0.04 per cent to settle at Rs280.24, reflecting a gain of Re0.12, according to the State Bank of Pakistan (SBP).

    During the preceding week, the Pakistani rupee sustained its upward movement, appreciating by Rs1.04 or 0.37 per cent against the US dollar, settling at 280.36 in the inter-bank market.

    This surge in value is attributed to the recent announcement of a staff-level agreement (SLA) between Pakistan and the International Monetary Fund (IMF) on the first review of the $3 billion Stand-by Arrangement (SBA). Consequently, the approval of the second tranche of the package ensued.

    The IMF Executive Board completed the first review of the SBA last week, facilitating an immediate disbursement of $700 million.

    As of January 5, the foreign exchange reserves held by the State Bank of Pakistan amount to $8.15 billion, with expectations of further augmentation through IMF inflows.

    On the global front, the US dollar experienced a decline on Monday amid renewed anticipations of a Federal Reserve rate cut in March.

    Simultaneously, the Chinese yuan faced challenges, hovering near a one-month low ahead of forthcoming economic data releases.

    The likelihood of a Fed cut in March gained traction following unexpected December data indicating a decline in US producer prices, prompting a slide in US Treasury yields. The US dollar index remained stable at 102.50, exhibiting minimal fluctuations in recent sessions.

    In the realm of oil prices, a significant indicator of currency parity, a slight uptick was observed on Monday. This movement was influenced by concerns over potential supply disruptions in the Middle East, following strikes by US and British forces aimed at preventing Houthi militia in Yemen from attacking ships in the Red Sea.

  • IMF greenlights $700 million for Pakistan’s economic stabilisation programme

    IMF greenlights $700 million for Pakistan’s economic stabilisation programme

    In a significant development, the International Monetary Fund (IMF) successfully concluded its first review of Pakistan’s economic reform programme on Thursday.

    This programme, backed by a $3 billion and-by a arrangement (SBA), has now received a boost with the immediate approval and disbursement of $700 million, as confirmed by the finance ministry.

    According to an official statement from the ministry, the completion of the first review by the IMF’s Executive Board, coupled with the payment of $528 million in special drawing rights, has elevated the total disbursements under the SBA to $1.9 billion.

    The infusion of funds from the IMF, combined with recent inflows from multilateral lenders, is anticipated to contribute to the stability of the Pakistani rupee, which has demonstrated relative steadiness over the past few months.

    The finance ministry highlighted that this fresh tranche would play a crucial role in facilitating rollovers from allied countries, including the United Arab Emirates, China, and Saudi Arabia.

    Additionally, it is expected to alleviate external debt repayment pressures faced by Pakistan.

    This positive development traces back to June 2023, when the IMF Executive Board granted approval for a much-needed nine-month arrangement with Pakistan to support its economic stabilisation program.

    The initial disbursement of $1.2 billion was promptly released in July, with the remainder subject to two quarterly reviews over the programme’s duration.

    The current IMF programme is slated to conclude in the second week of April, with the recent disbursement marking a significant step towards its successful execution.

    Notably, a staff-level agreement was reached in November 2023 between the IMF staff and Pakistani authorities, paving the way for the first review under Pakistan’s SBA.

    This agreement was contingent upon subsequent approval by the IMF’s Executive Board.

    Looking ahead, Pakistan is poised to receive the remaining amount in March under the $3 billion SBA.

    Despite facing challenging conditions, particularly persistently high inflation, which rose to 29.7 per cent in December from 29.2 per cent in the preceding month, Pakistan remains committed to navigating through these economic challenges with the assistance of international financial institutions.

  • Winning streak: Pakistani rupee appreciates 0.04% in fourth consecutive session

    Winning streak: Pakistani rupee appreciates 0.04% in fourth consecutive session

    In a resilient display, the Pakistani rupee continued its upward trajectory against the US dollar, marking gains for the fourth consecutive session in the interbank market on Monday. 

    The State Bank of Pakistan (SBP) reported a noteworthy appreciation of 0.04 per cent, with the rupee settling at Rs281.28 after a rise of Re0.12.

    This positive trend extends the rupee’s recent performance, as it achieved a 0.16 per cent appreciation during the preceding week, settling at Rs281.40 against the US dollar in the inter-bank market. 

    Impressively, this marks the eighth consecutive week of the local currency advancing against the greenback.

    The momentum driving the rupee’s strength can be attributed to the recent announcement of a staff-level agreement (SLA) between Pakistan and the International Monetary Fund (IMF). 

    This agreement pertains to the first review of the $3 billion standby arrangement (SBA), reinforcing investor confidence in Pakistan’s economic stability.

    A significant development contributing to this positive outlook is the notable increase in foreign exchange reserves held by the State Bank of Pakistan. 

    According to SBP data from the previous week, the central bank’s reserves surged by $464 million on a weekly basis, reaching $8.2 billion as of December 29.

    Internationally, the US dollar maintained stability on Monday, with investors eagerly awaiting a crucial US inflation report later in the week. This report is expected to provide clarity on the Federal Reserve’s monetary policy outlook. 

    The greenback’s recent rally was supported by a rebound in US Treasury yields as traders adjusted their expectations regarding the pace and scale of potential Fed cuts this year. 

    This cautious optimism globally has complemented Pakistan’s positive economic indicators, contributing to the sustained strength of the Pakistani rupee against the US dollar.

  • Pakistani rupee gains 20 paisa against US dollar

    Pakistani rupee gains 20 paisa against US dollar

    The Pakistani rupee (PKR) extended its positive trajectory against the US dollar for the sixth consecutive session, appreciating by 0.07 per cent in the inter-bank market on Tuesday.

    According to the State Bank of Pakistan (SBP), the rupee concluded at Rs283.01, marking an increase of Re0.20.

    In the previous session, the rupee saw a marginal gain, settling at Rs283.21 against the US dollar.

    Meanwhile, in a noteworthy development, Pakistan secured $4.285 billion from various financing sources in the first five months (July–November) of the current fiscal year 2023–24.

    This represents a decrease from the $5.114 billion borrowed during the corresponding period in 2022–23, as disclosed by data from the Economic Affairs Division (EAD).

    On the global front, the US dollar experienced a 0.3 per cent decline against the yen, maintaining its position close to a four-month high of 140.95 reached last week.

    Additionally, the greenback lingered near approximately five-month lows against the Australian and New Zealand dollars.

    This was attributed to the strength of risk-sensitive currencies, driven by the anticipation that the US Federal Reserve might initiate interest rate adjustments as early as the beginning of next year.

    In the realm of commodities, oil prices stabilised on Tuesday as investors assessed the potential repercussions on oil supply arising from attacks by Yemen’s Iran-aligned Houthi militants on ships in the Red Sea.

    These attacks have disrupted maritime trade, compelling companies to reroute vessels. Notably, crude prices surged nearly 2 per cent on Monday due to concerns about trade disruptions through the Suez Canal, a vital shipping route that accounts for approximately 15 per cent of global shipping traffic.

    Brent crude declined by 12 cents to $77.83 per barrel.

    The US West Texas Intermediate crude for January, set to expire on Tuesday, experienced a decrease of 62 cents, reaching $71.85. In contrast, the more active February contract only incurred a marginal loss of 3 cents.

  • Pakistani rupee appreciates 0.02% against US dollar to close at Rs283.21

    Pakistani rupee appreciates 0.02% against US dollar to close at Rs283.21

    In a continuing upward trend, the Pakistani rupee demonstrated resilience in the inter-bank market by securing gains against the US dollar for the fifth consecutive session, appreciating by 0.02 per cent on Monday.

    According to the State Bank of Pakistan (SBP), the rupee closed at Rs283.21, marking an increase of Re0.05.

    Throughout the preceding week, the rupee exhibited a noteworthy appreciation, gaining Re0.61 or 0.21 per cent to settle at Rs283.26 against the US dollar in the inter-bank market.

    This marks the fifth consecutive week of the rupee’s advancement against the dollar, a momentum attributed to the recent announcement of a staff-level agreement (SLA) between Pakistan and the International Monetary Fund (IMF) concerning the first review of the $3 billion Stand-by Arrangement (SBA).

    Since the revelation of the SLA on November 15, the local currency has strengthened by Rs4.88, or 1.7 per cent, against the greenback.

    Meanwhile, on a global scale, currencies commenced the week with caution following significant fluctuations in the previous week, driven by various central bank meetings, including rate decisions from the Federal Reserve, the European Central Bank (ECB), and the Bank of England (BoE).

    The greenback, which had been bolstered throughout most of 2022 and 2023 by aggressive rate hikes from the Fed and expectations of prolonged higher rates, experienced a notable decline of approximately 1.3 per cent against a basket of currencies last week in response to the outcomes of the Fed’s policy meeting.

  • Pakistan’s credit rating maintained by Fitch at ‘CCC’ amidst financing challenges

    Pakistan’s credit rating maintained by Fitch at ‘CCC’ amidst financing challenges

    Fitch Ratings, a US-based credit rating agency, has maintained Pakistan’s Long-Term Foreign-Currency Issuer Default Rating (IDR) at ‘CCC,’ according to a statement released on Wednesday.

    The ‘CCC’ rating indicates significant external funding risks due to elevated medium-term financing requirements, notwithstanding some stabilisation and Pakistan’s commendable performance on its current standby arrangement (SBA) with the International Monetary Fund (IMF), as explained by Fitch.

    While anticipating scheduled elections in February and prompt negotiation for a subsequent IMF programme after the SBA concludes in March 2024, Fitch cautioned about potential delays and uncertainties regarding Pakistan’s ability to achieve this.

    Fitch emphasised the potential vulnerability of recent reforms and the prospect of renewed political volatility in the wake of the upcoming elections. Regarding the ongoing IMF programme, Fitch expressed confidence in the unproblematic approval of the recent staff-level agreement (SLA) by the IMF board.

    Fitch’s assessment highlighted the positive outcomes of the programme review, including sustained fiscal consolidation, energy price reforms despite public backlash, and strides towards adopting a more market-driven exchange rate regime.

    However, Fitch also pointed out risks associated with policy implementation, citing a historical pattern of parties across the political spectrum in Pakistan failing to implement or reversing reforms agreed upon with the IMF.

  • IMF board’s January meeting to shape future disbursements for Pakistan

    IMF board’s January meeting to shape future disbursements for Pakistan

    The International Monetary Fund’s (IMF) Executive Board is scheduled to convene on January 11 to endorse the Staff-Level Agreement (SLA) with Pakistan, marking the inaugural review of the $3 billion Stand-By Arrangement (SBA).

    In June, the IMF Executive Board granted approval for a crucial nine-month arrangement with Pakistan, aimed at supporting its economic stabilisation programme.

    This approval facilitated an immediate disbursement of $1.2 billion, with the remaining funds to be disbursed over the programme’s timeline, contingent upon two quarterly evaluations.

    Following negotiations between IMF staff and Pakistani authorities on November 15 in Islamabad, the SLA was successfully reached, paving the way for Pakistan to access SDR 528 million (approximately $700 million).

    This latest disbursement brings the cumulative total under the nine-month $3 billion SBA to nearly $1.9 billion.

    While the initial plan had tentatively slated the IMF Board meeting for December 7 to approve the initial tranche, the confirmed date is now set for January 11.

  • Pakistan’s forex reserves rebound: SBP gains $77 million in a week 

    Pakistan’s forex reserves rebound: SBP gains $77 million in a week 

    According to data released on Thursday, the State Bank of Pakistan (SBP) witnessed a weekly increase of $77 million in its foreign exchange reserves, reaching $7.26 billion as of November 24.  

    The total liquid foreign reserves for the country amounted to $12.39 billion, with commercial banks holding net foreign reserves at $5.13 billion. 

    During the week ending on November 24, 2023, SBP’s reserves increased by $77 million, reaching $7,257.0 million. Contrastingly, the previous week saw a decrease of $217 million in Pakistan’s central bank reserves. 

    In July of this year, the central bank’s reserves received a boost as Pakistan obtained the initial tranche of approximately $1.2 billion from the International Monetary Fund (IMF) following the approval of a new $3-billion Stand-By Arrangement (SBA).  

    This boost was complemented by inflows from Saudi Arabia and the UAE. 

    However, the SBP reserves faced pressure due to debt repayments, a surge in import payments after the easing of restrictions, and a lack of fresh inflows. 

    In a significant development, the IMF announced last week that its staff and Pakistani authorities had reached an agreement on the first review of the SBA.  

    The staff-level agreement is pending approval by the IMF Executive Board. 

    The IMF team reached a staff-level agreement (SLA) with the Pakistani authorities on the first review of their stabilization program supported by the IMF’s $3 billion (SDR2,250 million) SBA.  

    Upon approval, approximately $700 million (SDR 528 million) will become available, bringing total disbursements under the program to almost $1.9 billion. 

    Following the SLA with the IMF, Caretaker Finance Minister Dr Shamshad Akhtar expressed confidence that external financing would not be an issue, anticipating inflows in December 2023 to contribute to an increase in foreign exchange reserves. 

  • Pakistan to receive $1.5 billion from international lenders following IMF approval

    Pakistan to receive $1.5 billion from international lenders following IMF approval

    Pakistan is poised to secure funds amounting to $1.5 billion from global lenders, contingent on the approval of the loan tranche under the $3 billion Stand-By Arrangement (SBA) by the International Monetary Fund (IMF), as highlighted by Dr Shamshad Akhtar, the caretaker finance minister, in a recent interview with a local news channel.

    It’s noteworthy that the IMF granted preliminary approval on November 15, 2023, for the disbursement of the upcoming loan tranche within the programme.

    Upon receiving approval, Pakistan will gain access to SDR 528 million, equivalent to approximately $700 million. This will contribute to the cumulative disbursements under the program reaching almost $1.9 billion.

    The agreement underscores the authorities’ commitment to advancing planned fiscal consolidation, expediting cost-reducing reforms in the energy sector, completing the transition to a market-determined exchange rate, and pursuing reforms in state-owned enterprises and governance.

    These measures aim to attract investment, support job creation, and simultaneously enhance social assistance.

    Nathan Porter remarked, “Anchored by the stabilization policies under the SBA, a nascent recovery is underway, supported by international partners and indications of improved confidence.”

    He added that the steadfast execution of the FY24 budget, ongoing adjustments of energy prices, and renewed inflows into the foreign exchange (FX) market have alleviated fiscal and external pressures.

  • PSX hits historic high: KSE-100 index surpasses 59,000 mark for the first time

    PSX hits historic high: KSE-100 index surpasses 59,000 mark for the first time

    The Pakistan Stock Exchange (PSX) extended its impressive performance, achieving a historic milestone as the benchmark KSE-100 Index surpassed the 59,000 mark for the first time ever on Friday.

    At the close of the session, the benchmark index concluded at 59,086.35, registering a gain of 186.51 points, or 0.32 per cent. This marks its highest closing level to date.

    Earlier in the day, the KSE-100 index reached an intra-day peak of 59,502.28. However, profit-taking activities in the second half of the trading session led to a partial retreat from these gains.

    The trading session commenced with widespread buying, particularly in key sectors such as automobile assemblers, cement, chemicals, commercial banks, oil and gas exploration companies, OMCs, and technology and communication, all contributing to a positive market trend.

    In the preceding session on Thursday, bulls maintained control of the bourse, with the benchmark index settling at 58,899.84, marking a substantial increase of 701.08 points, or 1.20 per cent.

    The bullish momentum in the stock market follows the recent staff-level agreement between Pakistani authorities and the International Monetary Fund (IMF) on the first review under the nine-month $3 billion Stand-By Arrangement (SBA).

    Market experts anticipate increased inflows in the coming weeks due to this agreement. However, data released on Thursday revealed a decrease of $217 million in foreign exchange reserves held by the State Bank of Pakistan (SBP) on a weekly basis, reaching $7.2 billion as of November 17.