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Import payment pressure weighs rupee down by nearly Re1

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  • Rupee closes at 220.68 against dollar.
  • Currency snaps gaining streak due to import payment pressure.
  • Analyst says currency to consolidate between 215 to 220.

KARACHI: The Pakistani rupee lost nearly Re1 against the dollar in the interbank market after coming under pressure due to import payments and political uncertainty.

The local currency was gaining ground against the greenback in the last three consecutive sessions and gained Rs1.1 and was trading below 219.

The rupee closed at 220.68 after losing Rs0.95, or 0.43%, against the greenback in the interbank market compared to Tuesday’s close of 219.73

Commenting on the rupee’s movement, Arif Habib Limited’s Head of Research Tahir Abbas told Geo.tv that the local unit is facing a “little pressure” in the interbank market. 

He said that it seems like Pakistan has received funding from the Asian Development Bank (ADB) and the foreign exchange reserves stand in a better position. 

“Most likely, allocation of $2 billion in funds from the World Bank will be received in November or December,” he said, adding that the International Monetary Fund’s (IMF) review scheduled in November will provide some relaxation and some targets will be eased up. 

He further added that Prime Minister Shehbaz Sharif’s visit to China next month is expected to tap into new investment opportunities and there might be talks about rescheduling. 

“This is a daily basis depreciation, however, the currency will consolidate between 215 to 220,” he added. 

Speaking to Geo.tv, Pakistan-Kuwait Head of Research Samiullah Tariq said that the rupee movement is market-determined, so the supply drives the demand. 

He added that there is a bit of pressure from the imports and the political uncertainty impacted the currency. 

Tariq maintained that the market depended on the ADB’s funds and that it would reverse the impact. However, according to the recent government system, the number of dollar outflows will be the same as inflows. 

He added that the effect of backlog from the two-three days can be seen on the parity. 

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In a first for history, PSX crosses the 77,000 milestone.

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At 77,213.31, the benchmark KSE-100 hit an all-time high, up 1,005.15, or 1.32%, from the previous close of 76,208.16.

The government’s readiness to seal an agreement with the International Monetary Fund (IMF) following the budget was cited by analysts as the reason for the upward trend.

Experts anticipate that in an attempt to bolster its position for a fresh bailout agreement with the International Monetary Fund (IMF), the budget for the fiscal year ending in June 2025 would set aggressive fiscal goals.

Budget for Pakistan, 2024–2025
Pakistan’s budget for the fiscal year 2024–25, with a total expenditure of Rs18.877 trillion, was presented on Wednesday by Minister of Finance and Revenue Muhammad Aurangzeb.

The Finance Minister, Muhammad Aurangzeb, outlined the budget highlights. He stated that the GDP growth target for the fiscal year 2024–25 is set at 3.6 percent, while the inflation rate is anticipated to stay at 12 percent.

He stated that while the primary surplus is anticipated to be 1.0 percent of GDP during the review period, the budget deficit to GDP is forecast to be 6.9 percent over the period under review.

According to the minister, tax income collection increased by 38% in the current fiscal year, and the province will receive Rs7,438 billion. The Federal Board of income expects to earn Rs12,970 billion in revenue for the upcoming fiscal year.

In contrast to the federal government’s projected net income of Rs9,119 billion, he stated that the federation’s non-tax revenue projections are set at Rs3,587 billion.

The federal government’s total outlays are projected to be Rs18,877 billion, with interest payments accounting for the remaining Rs9,775 billion.

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Pakistan currently has $14.38 billion in foreign exchange reserves.

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Pakistan’s commercial banks’ reserves, which stood at $5.28 billion at the conclusion of the week ending on June 7, rose by US$174 million, according to a central bank statement.

Reserving US$6.2 million less, the SBP now has US$9.10 billion in reserves. The causes for the decline in the reserves it had were not disclosed by the central bank.

The SBP released a statement that stated, “SBP reserves decreased by US$ 6 million to US$ 9,103.3 million during the week ended on 07-June-2024.”

The State Bank of Pakistan’s (SBP) foreign exchange reserves were reduced by US$ 63 million as a result of repaying external debt, with the reserves standing at US$ 9.093 billion as of earlier on June 6.

The central bank spokesperson said in a statement that as of the week that concluded on May 31, the nation’s total liquid foreign reserves were $14.31 billion.

In terms of net foreign reserves, commercial banks have US$ 5.22 billion of the overall foreign reserves, according to the SBP.

SBP reserves dropped by US$ 63 million to US$ 9,093.7 million during the week that ended on May 24, 2024, according to the announcement.

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In the local market, the price of gold plummets to Rs240,700/tola.

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Gold with a 24-karat purity level has dropped by Rs1200/tola on the local market.

Each tola of 24-karat gold is now selling for Rs240,700, with a further drop of Rs1029 bringing the price of 10 kilos of gold to Rs206,361. These figures are courtesy of the All Sarafa and Jewelers Association.

Meanwhile, after a $2 decline on the global market, one ounce of gold will be valued $2315.

A tola of gold was worth Rs 600 more on Wednesday.

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