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Gold price sees massive jump amid political plight

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The price of gold jumped massively in Pakistan Wednesday, as political turmoil following the arrest of former prime minister and Pakistan Tehreek-e-Insaf (PTI) Chairman Imran Khan continued to persist.

According to data provided by the All Pakistan Sarafa Gems and Jewellers Association (APSGJA), the rate of gold (24 carats) soared by Rs9,900 per tola and Rs8,487 per 10 grams to reach Rs240,000 and Rs205,761, respectively.

There was no change in the rate of gold in the international market, which stood at $2,031 per ounce.

While the previous metal’s value has been rising sharply recently, with its price reaching a new high almost every day, the primary reason for the latest jump is the new political storm that has erupted after Khan’s arrest. There have been violent protests across the country and the army has been deployed in three provinces. 

With the economy already in dire straits, people prefer to buy yellow metal to protect themselves against inflation and currency depreciation.

The weekly inflation hit an all-time high of 48.35% year-on-year (YoY) with prices of chicken and wheat flour increasing during the seven-day period ending May 4.

Meanwhile, it seems that Pakistan may not get a crucial tranche from the International Monetary Fund (IMF) anytime soon, as the country’s loan programme is not on the agenda of the lender’s Executive Board till May 17.

The delay in the revival of the IMF programme negatively impacts the currency market which, in turn, bolsters the demand for gold.

The rupee also fell to a fresh low of Rs290.22 against the US dollar in the interbank market Wednesday after losing Rs5.38 or 1.89%.

Data shared by the association also showed that the price of silver hit a new high after it increased by Rs100 per tola and Rs85.75 per 10 grams to settle at Rs3,100 and Rs2,657.7, respectively.

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November inflation to spike on gas price adjustment, dashing slowdown hopes

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  • CPI likely to rise to 28.6-29.6% year-on-year in Nov.
  • Inflation rate could register 2.1% month-on-month jump.
  • Weekly SPI on Nov 16 showed 480% surge in gas prices.

KARACHI: Inflation is expected to surge in November, primarily due to a massive hike in gas prices, according to brokerage reports released on Wednesday.

The consumer price index (CPI), which measures changes in the prices of goods and services, is likely to rise to 28.6-29.6% year-on-year in November, up from 26.9% in October.

A report by brokerage firm Insight Securities predicts that the inflation rate will register a 2.1% month-on-month jump, defying earlier expectations of a gradual slowdown from September onwards. Optimus Capital Management estimates that the CPI will increase by 2.9% month-on-month, primarily driven by an 11.6% jump in the housing index due to gas price revision and a 1.6% increase in the food index.

The primary cause behind the expected spike in November inflation is the adjustment of recently imposed fixed charges within the gas tariff structure. The weekly sensitive price index (SPI) inflation released on November 16 showed an astonishing 480% surge in gas prices.

However, a slight respite is expected from a 4.0% decrease in the transport index due to lower average fuel prices in November. The impact of the gas price hike was partially mitigated by the decline in fuel prices and the month-on-month fall in the food commodity adjustment (FCA).

Food inflation is attributed to a sharp increase in the prices of perishable items such as onions, tomatoes, potatoes, and eggs, as well as tea. Despite an increase in supply from imports, wheat prices still rose month-on-month, while sugar and cooking oil showed a significant decline during this period, based on weekly SPI data from the Pakistan Bureau of Statistics.

The recently implemented axle load regime, which limits the weight of goods transported by trucks, could put some pressure on the price levels of goods.

The higher October fuel cost adjustment (FCA) demanded at Rs3.5 per kilowatt hour (to be applicable in December) on electricity charges and a second-round impact of gas price increase could keep inflation under pressure. However, the base effect during the second half of the fiscal year is likely to help absorb the impact.

Commodity and energy prices, along with the exchange rate of the rupee against the US dollar, will remain important factors in keeping the CPI under control.

The reports projected the average inflation for the first five months of the fiscal year 2023/24 (July-June) to be 28.5%, compared with 25.2% in the same period last year and with an estimated ending at 19.4% year-on-year in June 2024.

They predicted that the State Bank of Pakistan (SBP) is likely to maintain the interest rate in its upcoming monetary policy committee (MPC) meeting due to the higher-than-estimated inflation in November. However, the SBP could opt to initiate an easing cycle in the first quarter of 2024, given the high base effect in the second half of the fiscal year.

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Petrol price likely to remain unchanged in next fortnightly review

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  • Petrol prices to hold steady in next review.
  • Diesel and kerosene prices to decline from Dec 1.
  • Next fortnightly review due tomorrow (Nov 31).

KARACHI: The prices of petroleum products will not see any major change in the upcoming fortnightly review with diesel and kerosene rates expected to go down slightly, according to the industry calculations.

According to a The News report published Thursday, the ex-refinery and ex-depot prices of petroleum products did not register any major fluctuation as global crude prices eased in recent days.

The ex-depot price of petrol, the most widely used fuel in the country, is slightly higher by Rs0.19 per litre to Rs281.53 per litre compared to the current price of Rs281.34, industry officials said.

The ex-depot price of high speed diesel (HSD), used mainly for transport, has been worked out at Rs290.47 per litre for the next fortnight compared to the existing price of Rs296.71 , showing a decline of Rs6.24 rupees per litre.

The ex-depot price of kerosene, used for cooking and lighting in rural areas, has been worked out at Rs202.16 per litre compared to the current price of Rs204.98, indicating a decrease of Rs2.82 per litre.

The ex-depot price of light speed diesel, another variant of diesel, has been worked out at Rs176.18 per litre for the next review against the present price of Rs180.45, registering a decline of Rs4.27 per litre, the report stated.

According to the industry’s working, the estimated exchange adjustment of petrol is zero whereas it is Rs1.80 per litre for HSD.

However, the industry officials said that the prices of petroleum products can change with the exchange loss as the industry did not put the exchange loss figure in its working for the next review.

The country fixes fuel prices on a fortnightly basis after evaluating fluctuating international energy market costs and the rupee-dollar parity to transfer the impact on domestic consumers.

They said global oil prices remained under pressure during November, falling below $75 a barrel in mid-November.

WTI was trading at $76.5 a barrel on November 29, down by nearly 7% as compared to October 29. Brent was down by 5.4% in the past month, trading at $86.35 a barrel, they added.

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Another day, another high: PSX continues bull run as KSE-100 goes past 61,000 points

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KARACHI: The Pakistan Stock Exchange (PSX) on Wednesday reached another historic high as the bulls continue to dominate the benchmark KSE 100 index with hopes of the State Bank of Pakistan lowering the policy rate in the coming days. 

Benchmark KSE-100 index at 10:09am. — Screengrab/PSX website
Benchmark KSE-100 index at 10:09am. — Screengrab/PSX website

The benchmark index gained 702, or 1.16%, during the intraday trade and stood at 61,433 points at 10:09am. 

Commenting on the bull run, Head of Research at Pakistan-Kuwait Investment, Samiullah Tariq said that the market was reacting positively because it expects an interest rate cut, a quick International Monetary Fund review and strong profitability of companies. 

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