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Rupee continues to dip as import payment pressure weighs

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2 years ago

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  • Rupee closes at 224.11 against US dollar in interbank market.
  • Local currency lost 21% against the greenback so far in 2022.
  • Analysts expect the rupee to reach 270 against dollar by June 2023.

Pakistani rupee remained under pressure on Tuesday as demand from importers seeking to pay their bills increased in the market.

The rupee closed at 224.11 against the US dollar after registering a meagre decline of 0.09% in the interbank market compared to Monday’s close of 223.91.

A currency dealer explained that banks are often urged to only settle import amounts that match the bank’s export amounts. The interbank market’s equilibrium is preserved by managing demand and supply.

Moreover, investors kept a close eye on the talks between Pakistan and the International Monetary Fund (IMF) which are currently at a stalemate.

An IMF review for the release of the next tranche under bailout funding has been pending since September.

Federal Minister for Finance and Revenue Ishaq Dar claimed last week that Pakistan met all targets for the review. However, the IMF resident chief said discussions with the Pakistani “authorities in these areas are ongoing, especially as not all end-September quantitative targets have been met”.

Pakistan made a payment of $1 billion Sukuk on Friday. However, the investors remained concerned about a fast depletion of the foreign reserves amid dried dollar inflows. The loss of foreign exchange reserves is unquestionably caused by the servicing and repayment of the debt.

Despite the rupee’s 21% decline against the greenback so far in 2022, there is a lot of uncertainty surrounding the Pakistani currency. Since 2019, Pakistan has adopted a market-based exchange rate regime. 

Even though the official exchange rate has recently remained in the Rs221-225 range, the black market rate is currently trading at a premium of more than 10% at Rs240-250, The News reported.

Except for a few currencies available to travellers at a premium of 3%, there is scarcely any foreign currency supply in that market as a result of the central bank’s strict regulations for exchange companies. 

The resurgence of the black market has been badly affecting dollar inflows, particularly inward remittances. Analysts expect the rupee to reach 270 against US dollar by June 2023.

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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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