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Rupee claws back on bailout revival assurances

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  • Rupee appreciates by Rs6.63 against dollar in interbank market.
  • Local currency closes at 278.46 in interbank market.
  • Rupee had slumped by nearly Rs19 against greenback a day earlier.

KARACHI: The Pakistan rupee gained significant ground against the US dollar after Finance Minister Ishaq Dar’s assurances of striking a deal with the International Monetary Fund (IMF) next week. 

The local currency appreciated by Rs6.63, or 2.38%, in the interbank market and closed at 278.46 against the greenback, as per the State Bank of Pakistan (SBP). 

On Thursday, the rupee slumped by nearly Rs19 against the US dollar due to the central bank’s monetary policy review and concerns over a stalled IMF deal.

The rupee slumped by Rs18.98 or 6.66% to close at 285.09 against the dollar in the interbank market as per the State Bank of Pakistan (SBP), down from Wednesday’s close of Rs266.11.

Speaking to Geo.tv, ECAP General Secretary Zafar Paracha cited a few reasons for the dollar depreciation, saying that the IMF urged Pakistan to trade the dollar at the rate it was being sold near the Afghan border.

“In other words, the IMF had stated that rather than the interbank rate or the open market, our true rate should be the grey market rate,” he added.

A day earlier, Dar had assured that Pakistan would strike a staff-level agreement with the Washington-based lender next week as the negotiations are about to conclude.

The finance minister — who took charge in September last year after Miftah Ismail was removed — also said that the economy is headed in the right direction and blamed miscreants for spreading rumours about Pakistan’s possible default.

“Anti-Pakistan elements are spreading malicious rumors that Pakistan may default. SBP forex reserves have been increasing and are almost US $1 billion higher than four weeks ago despite making all external due payments on time,” FinMin Dar said. 

The finance minister added that the negotiations with IMF are about to conclude and we expect to sign SLA with the Fund by next week. “All economic indicators are slowly moving in the right direction,” he added. 

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Over 500 points are lost by PSX stocks during intraday trading.

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The market saw a bearish trend as it dropped more than 500 points, just hours after Pakistan’s Stock Exchange (PSX) reached a new milestone by reaching the 73,000 mark.

As compared to the previous close of 72,742.75 points, the KSE-100 index dropped to 72,177.22 points, or 565.52 points, or 0.78% lower.
Expectations of an interest rate drop of up to 100 basis points during today’s Monetary Policy Committee (MPC) meeting, according to Intermarket Securities director of research CFA Muhammad Saad Ali, are driving market confidence.

The market is also being driven, he continued, by favourable news flow on upcoming negotiations with the International Monetary Fund (IMF) for a new programme.

Last Friday, the late-session purchasing fueled a 1% advance in the stocks, which helped them close close to 73,000 points. Dealers reported this.

Closed at 72,742.75 points on Friday, the benchmark KSE-100 index saw a gain of 771.35 points, or 1.07%.

Notwithstanding the turbulent session, according to Chase Securities analyst Muhammad Rizwan, “the market rebounded with a strong start and achieved a new all-time high.”.

“This impressive performance was driven by significant contributions from various sectors: fertiliser added 386 points, commercial banks contributed 174 points, the power sector provided 112 points, and cement added 93 points, collectively reversing the previous negative close and boosting market sentiment.”

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Despite global tides, Pakistan’s economy is recovering, according to Governor SBP

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Ahmad, who was speaking at the ICMA Pakistan Members Convocation, emphasised the country’s economy’s outstanding development while also highlighting the difficult macroeconomic environment of the previous year, which was marked by rising inflation, depleting foreign exchange reserves, pressure on exchange rates, and increased uncertainty.

Nonetheless, in the present times, the PKR has stabilized and the stock market is rising to unprecedented heights, reserves have increased to around US$8 billion despite large debt repayments, and inflation is dramatically decreasing.

Ahmad gave the government and SBP credit for their unwavering commitment to addressing macroeconomic difficulties head-on for this reversal.

Ahmad emphasized that the government’s efforts to reduce spending and achieve fiscal consolidation, together with the need for unpopular but necessary actions like the SBP’s increase of the policy rate to 22%, are producing beneficial results.

As global shocks like climate change, technology improvements, and cyber threats become more complex, he emphasises the significance of new viewpoints and creative solutions in tackling long-standing economic concerns.

Congratulating the graduating accounting professionals, Ahmad emphasized the importance of having a thorough understanding of accounting, finance, and economics in order to create workable solutions. He also urged the professionals to take a proactive approach to addressing new difficulties.

Ahmad emphasized the value of leadership abilities in policymaking and urged graduates to positively impact Pakistan’s economic landscape by working hard, being devoted to excellence, and contributing their full effort.

Along with giving a hearty welcome to Governor Jameel Ahmad and other SBP dignitaries, ICMA Pakistan President Shehzad Ahmed Malik also praised the SBP team’s efforts to stabilize the currency. With that, Ahmad presented the graduating CMAs with their degrees.

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The IMF board is anticipated to approve Pakistan’s $1.1 billion payout today.

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The IMF executive board meeting is scheduled to go until May 3, according to specifics. Based on the sources, it is expected that the international lender will approve Pakistan’s $1.1 billion payout today.

The State Bank of Pakistan is anticipated to obtain the final tranche from the IMF tomorrow, following approval, they added.

On July 12, 2023, Pakistan took advantage of a $3 billion loan package offered by the International Monetary Fund (IMF).

Thus far, Pakistan has been granted two installments totaling $1.9 billion: $1.2 billion in July and $700 million in January 2024.

On the last assessment of a $3 billion loan plan, Pakistan and the International Monetary Fund (IMF) came to a staff-level agreement last month.

Following their week-long visit to Islamabad, which ended on March 19, the IMF delegation made the announcement.

Global lender expressed its optimism that the incoming caretaker administration and central bank of Pakistan would persist in their efforts to stabilize the country’s economy, complimenting them on their “strong program implementation.”

In order to further solidify economic and financial stability, the new government is dedicated to carrying out the policy initiatives that were initiated under the existing Stand-By Arrangement for the balance of this year, the IMF official stated.

In June of last year, the IMF granted Pakistan’s economic stabilization program support through a critical nine-month agreement.

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