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Rupee breaks losing streak against dollar

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  • Pakistani rupee closes at 239.65 against US dollar.
  • Rupee’s losing streak breaks after 15 consecutive sessions.
  • Analyst cites correction in market for rupee’s strength.

KARACHI: The Pakistani rupee on Friday broke its losing streak against the dollar after continuously depreciating for 15 consecutive sessions as the economy suffers following catastrophic floods.

At the closing of the interbank market’s trade, the rupee gained Rs0.06 to reach 239.65, according to the State Bank of Pakistan (SBP), up in value from the previous session’s close of 239.71 — just 0.23 short of an all-time low.

Arif Habib Limited’s Head of Research Tahir Abbas told Geo.tv that the rupee’s strength came after a correction following the expected inflow of funds from multilateral money lenders.

Abbas said that the market responded to the news of the World Bank (WB) planning to provide $1.7 billion to Pakistan in terms of flood relief.

The analyst mentioned that the government being in talks with the International Monetary Fund (IMF) for relaxing the conditions of the current programme was also a positive indicator for the market.

Analyst Yousuf Rahman at KASB Securities told The News that debt servicing was one of the reasons behind the rupee’s consistent decline as gross financing needs for the year are estimated at $32 billion.

Rahman also noted that floods have forced the government to import vegetables, grains, and cotton to replace damaged crops — increasing the pressure on the rupee.

After recent floods added to the country’s financial crisis, the Financial Times, citing a UN policy memo, reported that Pakistan should suspend international debt repayments and restructure loans with creditors.

The memorandum, which the UN Development Programme will share with Pakistan’s government this week, states that the country’s creditors should consider debt relief so that policymakers can prioritise financing its disaster response over loan repayment, the newspaper said.

Floods have affected 33 million Pakistanis, inflicted billions of dollars in damage, and killed over 1,500 people — creating concern that Pakistan will not meet its debts. Pakistan earlier estimated damage at $30 billion, and both the government and UN Secretary-General Antonio Guterres have blamed the flooding on climate change.

The memo further proposed debt restructuring or swaps, where creditors would let go of repayments in exchange for Pakistan agreeing to invest in climate change-resilient infrastructure, FT said.

In line with the dominant trend over the last several weeks, the country’s foreign exchange reserves held by the State Bank of Pakistan (SBP) also declined by 3.21% to $8,346.4 million as of September 16.

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Pak Suzuki plans to export cars

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  • Company working on hybrid variants, says CEO. 
  • Hiroshi Kawamura calls local participants for joint efforts.
  • Notable part manufacturers attend meeting. 

LAHORE: Pak Suzuki Motor Company Ltd (PSMCL) chief executive Hiroshi Kawamura has said that the company has been working on exports of cars which have been upgraded to many WP-29 standards, The News reported Friday. 

Addressing the second round of interactive meetings with the part-makers — held under the banner of Suzuki Motors — Kawamura said that the economic issues were transitory and the automobile company was committed to providing affordable vehicles to common Pakistanis.

The CEO also revealed that the company was working on hybrid variants.

Participants of the meeting, which was attended by notable part manufacturers, unanimously agreed that the automakers should promote localisation, while also reaching out to global markets.

Calling the local participants for joint efforts, Kawamura said: “It is imperative to take stock of the escalating crisis collectively for the automotive industry.” 

“Nothing can be achieved without local partners.”

Addressing the meeting, Pakistan Association of Automotive Parts and Accessories Manufacturers (PAAPAM) Senior Vice Chairman Usman Aslam Malik assured of complete support to original equipment manufacturers (OEMs) for the export of auto components.

It should be noted that WP-29 standards are a unique worldwide regulatory forum within the institutional framework of the UNECE Inland Transport Committee.

Three UN Agreements, adopted in 1958, 1997 and 1998, provide the legal framework allowing contracting parties (member countries) attending the WP.29 sessions to establish regulatory instruments concerning motor vehicles and motor vehicle equipment.

Those are UN Regulations, annexed to the 1958 Agreement; United Nations Global Technical Regulations (UN GTRs), associated with the 1998 Agreement; and UN Rules, annexed to the 1997 Agreement.

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Govt plans austerity measures by slashing Rs1.9tr expenditures

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  • Govt decides reducing operational spending on devolved ministries.
  • Recommends ban on new posts, hiring daily wages/other staff, etc. 
  • Considers implementing cost-sharing mechanism of BISP with provinces. 


ISLAMABAD: The caretaker government is planning to take austerity measures by cutting down expenditures by Rs1.9 trillion including banning new posts, purchasing security vehicles, and slashing down allocation for development, The News reported Friday. 

The government has also considered making a treasury single account (TSA) and asking the federal ministries and attached departments to shift the money into the federal government account to save up to Rs424 billion.

It has been calculated that 10% of the expenditures incurred on running the federal government in FY22 could save Rs54 billion as worked out by the World Bank. 

The government has also decided to reduce the operational spending on devolved ministries to save up to Rs328 billion for the whole financial year 2023-24. 

In the aftermath of the 18th Amendment, different subjects were transferred to the provinces but the centre continued spending, causing losses to the national exchequer.

A detailed working of the government considered by the high-profile Cabinet Committee on Economic Revival (CCER) so far proposed certain austerity measures to cut down the expenditures by up to Rs1.9 trillion on a short-term basis. 

However, it is yet to be seen if these measures will be implemented in letter and spirit. 

It recommended that the federal and provincial governments both take austerity measures to reduce the expenditures by Rs54 billion for six months such as slapping a ban on new posts, hiring of daily wages/other staff, ban on purchasing new vehicles including from project funding, ban on purchase of machinery and equipment except medical, ban on travel abroad including official visits, medical treatment, cabinet members to forego pay and government vehicles and security vehicles to be withdrawn.

The ambitious plan also envisages that the triage of 14 loss-making entities will potentially save Rs458 billion for the whole financial year. The reduced operational spending on devolved ministries is going to save up to Rs328 billion during the current financial year.

The Ministry of Finance has estimated that the devolution of the Higher Education Commission (HEC) to the provinces would save Rs70 billion per annum. Education had become a provincial subject in the aftermath of the 18th Amendment but the Center recontinued with the HEC at the federal level. 

The caretaker regime has placed it as an agenda to devolve the HEC to the provinces so it is yet to see how much they are going to succeed on this front. 

Moreover, it is also considering implementing the cost-sharing mechanism of the Benazir Income Support Programme (BISP) with the provinces to save Rs217 billion on an annual basis.

The federal government is also considering re-focusing the Public Sector Development Program (PSDP) spending only on federally mandated projects which could save Rs315 billion annually. 

Caretaker Minister for Finance Dr Shamshad Akhtar had already directed the minister for planning to work out details of projects of a provincial nature for their removal from the list of PSDP to cut down the expenditures by Rs315 billion for the current fiscal year. 

The last Pakistan Democratic Movement (PDM)-led regime had allocated Rs950 billion for the PSDP in budget 2023-24.

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PKR on track to become top-performing currency this month: Bloomberg

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  • Pakistani currency rose around 6% this month against dollar.
  • Authorities curb leakages happening through illegal channels. 
  • Crackdown on illegal dollar traders helps local currency. 

The Pakistani rupee is on track to become the top performer globally in September as the caretaker government continues its crackdown on illegal dollar trade, Bloomberg reported Thursday.

The local currency rose around 6% this month against the dollar — an amazing feat despite the Thai baht and South Korean won tumbling against the greenback.

Major currencies lost ground against the dollar on speculations that the US interest rates will stay elevated for longer.

The rupee increased 0.1% to 287.95 per dollar on Thursday, after sliding to a record low of about 307 this month. Pakistan’s currency market will remain closed for the Eid Miladun Nabi holiday on Friday.

“Many leakages were happening through illegal channels of hawala and hundi trade from the open market,” Khurram Schehzad, chief executive officer of Alpha Beta Core Solutions Pvt Ltd, told Bloomberg.

“When the dollar rate reverses everybody, the hoarders, the exporters who are holding their export proceeds, start selling their dollars,” Schehzad said.

The interim rulers have intensified efforts by launching a crackdown on people involved in the illegal dollar trade, allowing the currency to gain some lost ground.

The Federal Investigation Agency, Bloomberg reported, conducted raids across the country and security officials in plainclothes were deployed at money exchanges to monitor dollar sales as part of the crackdown.

Caretaker Prime Minister Anwaar-ul-Haq Kakar this week said the rupee’s gain is “fostering optimism for stability.”

For its part, the State Bank of Pakistan raised the capital requirements of smaller exchange companies and ordered large banks to open their own exchange companies to make the retail foreign exchange market more transparent and easier to monitor.

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