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Pakistani rupee continues to take a hammering amid political uncertainty

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  • Rupee hits all time low, depreciates to 226 against US dollar in interbank market.
  • Pakistan Stock Exchange witnesses negative trend.
  •  KSE-100 index falls 248 points to 40,140 points.

After shattering all previous records, the Pakistani rupee on Wednesday further depreciated to Rs226 after losing 4.1 against the US dollar in the interbank market.

The Pakistani rupee had hit an all time low on Tuesday as well of 224 against the dollar in the afternoon interbank trade, before closing at 221.99.

It was the highest day-on-day depreciation after June 26, 2019 when the currency fell by Rs6.80.

Meanwhile, the Pakistan Stock Exchange witnessed a negative trend as the KSE-100 index fell 248 points to 40,140 points.

PML-N’s thumping in the Punjab by-elections triggers political uncertainty

The ruling PML-N’s thumping in the Punjab by-elections has triggered political uncertainty along with import pressure taking the Pakistani rupee on a downward trajectory.

Analysts believe, however, that the domestic political and economic situation are not the only factors at play.

“The dollar is getting stronger in the global market almost against all the world currencies and the Pakistani rupee is not the exception,” said Alpha Beta Core CEO Khurram Schezad.

‘IMF is yet to be on board’: Khurram Schezad

Speaking of Pakistan’s financial situation, Schezad said that the country’s external account issues “are not settled as yet, the IMF (International Monetary Fund) is yet to be on board, and the flows are yet to materialise”.

“Global rating agencies have put a negative outlook on the economy, so that is an additional burden that is weighing on the financial markets in general and foreign exchange market in particular,” he added.

Exchange Companies Association of Pakistan (ECAP) Chairperson Malik Bostan Malik Bostan told Geo.tv that there were three reasons behind the constant devaluation of the local unit.

The forex expert said that investors are jittery at the moment as the Opposition PTI has bagged more seats than the PML-N in the Punjab by-polls — creating uncertainty over the future of the current set-up.

Bostan said that the speculations that the IMF’s Executive Board approval would take time and the money lender’s statement of being ready to negotiate with a caretaker government have exacerbated the devaluation.

He also pointed out that since the Taliban took over Afghanistan, Pakistan has provided them trade relief, resulting in additional pressure on the rupee.

The currency trader said that the State Bank of Pakistan (SBP) cannot intervene in the rising rupee-dollar parity as the country has agreed that the central bank will not intervene in the matter.

“…but even if it wishes to intervene, the SBP does not have enough dollars to inject into the market,” he said, adding that if the government wants to save the rupee, it will have to curtail the imports.

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Changes in the US dollar’s value are directly correlated with variations in gold prices.

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The price of 24-karat gold in Pakistan increased by Rs1500 on Thursday, reaching Rs231,000 per tola. This was another jump in the price of gold in the country.

Dealers reported a comparable surge in the price of 10 grams of 24-karat gold, which is currently trading at Rs198,045 after rising by Rs1285. In addition, the cost of ten grams of 22-karat gold increased significantly, trading at Rs 181,541.

These fluctuations are strongly correlated with shifts in the US dollar’s value, demonstrating the tight connection between gold prices and exchange rates. This emphasizes how local gold markets are impacted by variables related to the global economy.

At Rs2,580, the price of 24-karat silver remains steady right now. The price of gold increased significantly on a global scale as well, rising by $14 to $2,214 per ounce.

It’s critical to understand that changes in the worldwide market can have a substantial impact on gold prices in Pakistan throughout the day. The gold rates that are offered are obtained from reliable sources, mostly situated in Karachi and Multan.

It is recommended that individuals seek the advice of nearby gold merchants and jewellers for the most precise and current information regarding gold prices.

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Pakistan pledged to finish building the TAPI gas pipeline.

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The minister discussed the importance of the TAPI gas pipeline project for Pakistan’s energy needs during a meeting with Turkmenistan’s ambassador to Pakistan, Atadjan Movlamov.

The Minister was congratulated by Ambassador Movlamov on taking office and his commitment to the project was noted.

Dr. Musadik Malik thanked the ambassador for his kind words, acknowledged the support, and promised to maintain the two nations’ friendship. The intergovernmental commission and working group meetings for the project this year were briefed by Atadjan Movlamov.

He invited the Minister to attend the Turkmenistan Energy Forum, which would take place in Paris the following month.

TAPI undertaking
The project is for the construction of a 1,680-kilometer pipeline with a 56-inch diameter that can carry 3.2 billion cubic feet of gas per day (bcfd) from Turkmenistan through Afghanistan and Pakistan to the border between Pakistan and India.

According to the terms of the TAPI agreement, Afghanistan would receive its portion of 0.5 billion cubic feet of gas per day, while Pakistan and India will each receive 1.325 billion cubic feet of gas per day.

In order to carry out the Turkmenistan-Afghanistan-Pakistan-India (TAPI) gas pipeline project, Pakistan and Turkmenistan inked a cooperative implementation plan in Islamabad on June 4.

Prime Minister Shehbaz Sharif and a delegation from Turkmenistan, led by Minister of Energy and Water Resources Daler Juma’a, were present at the ceremony.

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The price of gold is still rising in Pakistan.

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According to the All Sindh Sarafa Jewellers Association, the cost of 10 grams of 24 karat gold grew by Rs. 86 to Rs. 196,760 from Rs. 196,674, while the cost of 10 grams of 22 carat gold jumped to Rs. 180,363 from Rs. 180,284.

The price of silver per tola and ten grams stayed at Rs. 2,211.93 and Rs. 2,580, respectively.

According to the Association, the price of gold on the global market rose by $7 to $2,200 from $.2,193.

It is important to note that Pakistani and IMF personnel have agreed at the staff level on the second and final review conducted as part of Pakistan’s Stand-By arrangement.

The International Monetary Fund (IMF) and Pakistan have reached a staff-level agreement on the second and final review of Pakistan’s stabilization program, which is supported by the IMF’s US$3 billion (SDR2,250 million) SBA Agreement. This is according to the official statement released by a team led by Nathan Porter.

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