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Pakistan rupee outperforms Asian peers against US dolla

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1 year ago

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  • Value of other Asian currencies relative to the dollar decreased.
  • Rupee outperformed global currencies, recovering all of its losses in Sept.
  • The crackdown has worked in curbing the open market rate.

As a result of a crackdown on currency smuggling and illegal foreign exchange trade, the Pakistani rupee has become the best-performing currency in Asia so far this fiscal year, The News reported on Tuesday.

According to data based on the MSCI Asia Emerging and Frontier Markets Index released by Topline Securities on Monday, the rupee has appreciated by 1.7% versus the dollar between July 1 and October 9, 2023.

But at the same time, the value of the other Asian currencies relative to the dollar decreased. In relation to the dollar, the Malaysian ringgit plummeted by 1.4%, the Korean won by 2.5%, the Thai baht by 5%, and the Bangladeshi taka by 1.9%.

When Pakistan’s caretaker government took office in August, the currency was under tremendous pressure. But in September, the rupee outperformed global currencies, recovering all of its losses and rising by 6% against the dollar.

On September 5, the rupee plunged to a record low of 307.1 against the dollar, but since the country’s central bank and security forces started taking action the next day to stop black market activity, the rupee has recovered sharply. In just five weeks, the rupee has risen by about 9% against the dollar.

“The crackdown has worked in curbing the open market rate,” said Fahad Rauf, the head of research at Ismail Iqbal Securities. “The economic fundamentals have not changed. Any further appreciation would probably create another bubble. SBP should step in to buy dollars and encourage exporters,” he added.

In addition to a crackdown on illegal dollar transactions, the State Bank of Pakistan’s structural reforms related to foreign exchange companies, exporters selling dollars, and panic selling by hoarders have allowed the rupee to retain its upward trend.

The rupee closed at 281.65 per dollar in the interbank market on Monday. It ended at 282.69 in the previous session. Analysts expect the rupee to surpass the 280 per dollar level in the coming days. This assumption is due to a number of factors, including: the IMF appears to be moving towards approval; another tranche will give the rupee wings; the closure of the Afghan border has reduced smuggling, especially of gold, which was the primary means of wealth transfer; the current account is expected to show a surplus; and remittances are anticipated to come as a pleasant surprise.

The government’s attempts to eliminate the abuse of the Afghan Transit Trade (ATT) and the continued decline in oil prices will be very advantageous to the balance of payments, strengthening the rupee.

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Business

Dar chairs the CCOP meeting; Blue World’s bid offer of Rs.10 billion is rejected.

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2 days ago

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The Foreign Minister/Deputy Prime Minister chaired the Cabinet Committee on Privatization meeting.

Other committee members who attended the conference included the Federal Secretaries of several Divisions, the Ministers of Finance and Revenue, Industry and Food, Commerce, Power, and Privatization.

The CCOP took the PC Board’s recommendation into consideration and suggested that Blue World’s bid of 10 billion rupees for the sale of 60% of PIACL’s shares be rejected. The bid was rejected by the CCOP, who chose to follow the PC Board’s advice.

The government’s determination to sell out PIACL through government-to-government or privatization was reaffirmed by the CCOP.

The CCOP was pleased with the Aviation Division’s evaluation of PIACL’s sound financial standing.

Additionally, the CCOP established a committee, chaired by the Minister of State for Finance, to assess potential transaction possibilities for the privatization of the Roosevelt Hotel and the appropriate modes of adoption in light of existing legal rules.

Prior to its subsequent meeting, the CCOP also ordered that all difficulties be resolved and an agreement for the selling of services to an international hotel be concluded.

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The KSE-100 Index has surged by 790 points, resulting in an all-time peak for the stock exchange.

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2 days ago

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The benchmark KSE-100 Index increased by 790 points, marking a new all-time high for the Pakistan Stock Exchange (PSX) at 94,982 points.

The record-breaking performance underscores a surge of optimism and investor confidence in the stock market.

As investors responded to favorable economic signals, the market experienced a significant increase of over 500 points in early trading. Later, the KSE-100 Index reached another record level of 94,786 points after adding 594 points to its upward trajectory.

This positive development comes as the State Bank of Pakistan’s (SBP) foreign exchange reserves saw an increase of $84 million, reaching $11.26 billion during the week ending November 8, according to data released by the central bank on Thursday.

This represents an increase of 0.75% from the previous week. In addition, the nation’s total liquid foreign reserves experienced a modest increase, increasing by $33.7 million or 0.21% week-on-week to $15.97 billion.

In contrast, commercial banks’ reserves experienced a decline of $50.3 million or 1.06%, ultimately settling at $4.71 billion.

Furthermore, the economic team of Pakistan has expressed confidence in the discussions with the International Monetary Fund (IMF). Minister of State for Finance Ali Pervaiz Malik, in an exclusive conversation with Samaa TV, claimed talks were moving in a positive direction.

Highlighting improvements in Pakistan’s economic conditions, Malik noted substantial progress over the past six months to a year. He emphasized that Pakistan’s current economic situation has seen significant enhancement, with a reduced current account deficit of only $100 million in the first quarter, a reflection of the government’s strategy to increase remittances and boost exports.

Malik shared that discussions with the IMF are primarily focused on external financing, and while there have been speculations about a potential mini-budget or an increase in the petroleum levy, he clarified that these are currently premature considerations.

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Positive IMF negotiations propel KSE-100 Index above 94,000 points

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3 days ago

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As a result of investors’ optimism about the reported progress in the continuing talks with the International Monetary Fund (IMF), the Pakistan Stock Exchange (PSX) experienced a robust surge.

The benchmark KSE-100 Index of the PSX, which tracks market sentiment, rose 713 points to a new record high of 94,068 points, breaking above the 94,000-point barrier, as the trading session began.

Early in the day, the stock market began its upward trajectory as the KSE-100 Index steadily rose, gaining 574 points to reach 93,932 points. A possible agreement with the International Monetary Fund (IMF) might lead to more fiscal stability and back Pakistan’s economic reforms, which is why investors are so optimistic about the country’s future.

Officials from the Federal Board of Revenue (FBR) informed the International Monetary Fund (IMF) on Wednesday that the government would not be introducing a mini-budget and would instead continue to aim to collect Rs12,970 billion in taxes each year.

In line with continuing discussions with the Fund, FBR sources revealed that petroleum goods will not be subject to the General Sales Tax (GST).

The fact that Pakistan’s tax-to-GDP ratio has increased from 8.8% to 10.3%, a 1.5% gain viewed as a favorable sign of Pakistan’s fiscal policies, has reportedly pleased the IMF, who has voiced satisfaction at Pakistan’s recent economic performance.

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