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Pakistan rupee firm as dollar supply matches demand

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  • Analysts see rupee trading in range down the line.
  • Dealers to assess impact of AIIB’s $500 on market.
  • IMF tranche delay remains cause of economic concern.

The Pakistani rupee Tuesday closed unchanged against the US dollar in the interbank market as demand for the dollar and the supply reached equilibrium.

The local unit closed at 223.95 per dollar, according to the State Bank of Pakistan (SBP), which had finished the session at the same value on Monday — after depreciating Re0.01. 

Currency dealers don’t see the rupee going far from the base as they are currently assessing the impact of the $500 million inflows received from the Asian Infrastructure Investment Bank (AIIB) Tuesday.

The SBP received $500 million from the AIIB, confirmed Finance Minister Ishaq Dar Tuesday.

“Asian Infrastructure Investment Bank (AIIB) has transferred today, as per their Board’s approval, to State Bank of Pakistan/Government of Pakistan US $ 500 million as program financing,” tweeted the finance minister.

Moreover, dealers said a delay in the arrival of a tranche of the IMF’s Extended Funding Facility may weigh on the rupee-dollar parity in the days to come. 

Pakistan and the IMF talks are continuing, with both sides yet to strike a broader agreement on a revised macroeconomic framework for the current financial year, reported The News, citing sources. 

The lingering of the talks may delay the conclusion of the ninth review and release of the $1 billion tranche till the next calendar year 2023.

The SBP raised its benchmark interest rate by 100 basis points to 16% in an effort to tame high inflation. The SBP has confirmed that the $1 billion Eurobond repayment that is due on December 5 will be made on December 2.
“This repayment will not have any impact on foreign reserves as the funding has already been arranged,” it said. In addition, $7 billion worth of loan payments has also been rolled over.

Moreover, the Karachi interbank offered rate (KIBOR), a gauge of what banks charge each other to borrow the rupee, hits a record high on Monday, as the money market was surprised by the State Bank’s decisions to raise interest rates by 100 basis points.

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Irfan Siddiqui meets with the PM and informs him about the Senate performance of the parliamentary party.

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The head of the Senate’s Foreign Affairs Standing Committee and the PML-N’s parliamentary leader paid Prime Minister Muhammad Shehbaz Sharif a visit in Islamabad.

Senator Irfan Siddiqui gave the Prime Minister an update on the Parliamentary Party’s Senate performance.

Additionally, Senator Irfan Siddiqui gave the Prime Minister an update on the Senate Standing Committee on Foreign Affairs’ performance.

He complimented the Prime Minister on his outstanding efforts to bring Pakistan’s economy back on track and meet its economic objectives.

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SIFC Increases Direct Foreign Investment: Investment in the Energy Sector Rises by 120%

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The Special Investment Facilitation Council is intended to help Pakistan’s energy sector attract $585.6 million in direct foreign investment in 2024–2025. The amount invested at the same time previous year was $266.3 million.

This is a notable 120% rise, mostly due to investments in gas exploration, oil, and power. Such expansion indicates heightened investor confidence and emphasizes the development potential in important areas.

The State Bank reports that foreign investment in other vital industries has increased by 48% to $771 million.

This advancement is a blatant testament to SIFC’s efficient investment procedure and quick project execution.

The purpose of the Special Investment Facilitation Council is to establish Pakistan as an investment hub by aggressively promoting regional trade and investment in the energy sector and other critical industries.

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Business

Discos report losses of Rs239 billion.

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When compared to the same period last year, the data indicates that discos have decreased their losses in the first quarter of the current fiscal year.

The distribution businesses recorded losses of Rs239 billion in the first three months of the current fiscal year, a substantial decrease from the Rs308 billion losses sustained during the same period the previous year.

Additionally, the distribution businesses’ rate of recovery has improved. It has increased to 91% in the first quarter of this year from 84% in the same period last year, indicating success in revenue collection.

Regarding circular debt, the Power division observed a notable change. Last year, between July and October, the circular debt grew by Rs301 billion. Nonetheless, this year’s first four months saw a relatively modest increase in circular debt, totaling about Rs11 billion.

These enhancements show promising developments in the electricity sector’s financial health in Pakistan, where initiatives are being made to accelerate recovery rates and slow the expansion of circular debt.

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