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Pakistan-IMF deal: PKR expected to remain steady next week

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1 year ago

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  • Positive impact of Pakistan-IMF deal on rupee.
  • Dealers expect balanced inflow, outflow of dollars.
  • IMF board to meet on July 12 for loan approval.

KARACHI: The rupee is expected to remain steady next week as the currency market hopes for the approval of Pakistan’s bailout package by the International Monetary Fund’s (IMF) Executive Board on July 12.

According to a report published in The News, dealers said on Saturday that dollar inflows and outflows are likely to be balanced.

In the interbank market, the local unit rose by 2.8% or Rs8 week-on-week.

“Over the course of the next week, the rupee is probably not going change much. The quantity of foreign currency that banks generate (via exports and remittances) must equal the amount of import payments before releasing them,” said an analyst.

“By using this strategy, the current account deficit is kept under check, and unrestricted imports are avoided,” the expert noted, adding that the State Bank of Pakistan (SBP) seemed to monitor the current account actively.

Once inflows from the IMF and friendly nations are received, it is feasible that imports may be permitted more freely.

However, according to the analyst, because payments are increasingly being accepted, businesses are not encountering substantial import delays.

Currency experts hope that the IMF will most likely approve the standby arrangement during its Executive Board meeting on July 12 and that $1.1 billion will be credited to the SBP account by July 18.

Pakistan Tehreek-e-Insaf (PTI) Chairman Imran Khan, the key opposition figure in Pakistan and a former prime minister, met the IMF team on Friday at his residence in Zaman Park, Lahore.

Khan voiced his support for the bailout deal with the global lender but sought guarantees for timely elections in the country.

The IMF stated that it was seeking the backing of Pakistan’s political parties, including Khan’s, for the new nine-month $3 billion stand-by arrangement and the policies linked with the programme in the run-up to the country’s autumn elections.

“The market does not expect any drastic movement in USD-PKR parity,” said Tresmark — a financial portal for treasury markets — in a note.

“Our last week’s projections of 275-280 till IMF approval and 282-287 post-IMF approval still hold,” it added.

The views were based on potentially significant inflows catalysed by the IMF agreement, the rupee being undervalued on a REER basis, elevated interest rates, continued management of imports, increased forex reserves on account of favourable current account deficit, and SBP’s key objective to build reserves rapidly.

Pakistan’s foreign exchange reserves held by the central bank increased by $393 million to $4.462 billion in the week ending June 30.

The country’s dollar bonds saw a correction during the outgoing week. Following the positive response to the Pakistan-IMF agreement, the country experienced a significant upswing in its international bond prices, reflecting heightened investor confidence, according to JS Global.

“However, there has been a correction in bond prices and yields this week,” it said. “Bond prices are showing on average a 7% day-on-day decline as per current prices.”

On a cumulative basis, the increase in international bond prices averaged around 26% since the recent low of June 23, 2023, JS Global stated.

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

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21 hours 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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21 hours 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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2 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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