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Rupee claws back on positive cues about $700m financing

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  • Rupee closes at 261.90 against the US dollar.
  • In the open market, local unit closes at 269.
  • Investors take cue from news regarding IMF programme.

The Pakistani rupee bounced back on Wednesday after Finance Minister Ishaq Dar announced that Islamabad is expected to receive $700 million from China this week.

The local unit closed interbank market trade at 261.90 against the US dollar after registering a meagre increase of Re0.61, or 0.23%, compared to Tuesday’s close of 262.51.

Taking to his Twitter handle, the finance czar announced that formalities have been completed and the Board of China Development Bank has approved the facility of $700 million for Pakistan.

“This amount is expected to be received this week by the SBP which will shore up its reserves,” he wrote.

Pakistan is in dire need of funds as it battles a wrenching economic crisis as the central bank-held foreign exchange reserves barely cover one month of imports.

Sources also told The News that two more commercial loans were expected to be re-financed including $500 million and $800 million. So in totality, Pakistan is eyeing to get re-financing of Chinese loans up to $2 billion by the end of February or the first week of March 2023.

Moreover, further assurance from Prime Minister Shehbaz Sharif regarding the revival of the International Monetary Fund (IMF) programme boosted the market’s sentiment as Pakistan is desperate to unlock the next tranche of a $6.5 billion loan facility.

In the open market, the local currency closed the day at 269 — the same as the day earlier.

Globally, the dollar rose slightly on Wednesday, continuing to trade near six-week highs on the back of strong economic data.

The dollar index was up 0.13% at 104.28, not far off the six-week high of 104.67 hit at the end of last week.

Investors’ focus now turns to the release of the minutes from the Fed’s latest meeting later on Wednesday, which could offer more insight into policymakers’ plans.

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Pakistan’s gold price increases by an additional Rs. 800 per tola.

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The price of yellow metal in the local market hit Rs247,300 on the first working day of the week, following a rise of Rs800 in a single day.

The cost of ten grams of 24-karat gold increased by Rs686 on Monday, making the current price Rs212,020.

In addition, the cost of 10 grams of 22-karat gold increased significantly, trading at Rs194,351.

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.

The price of the precious metal dropped $16 on the international market on Monday, hitting $2,348 per ounce.

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A delegation from Pakistan travels to the US to bargain with the IMF for a new loan.

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The Pakistani delegation consists of the Governor of the State Bank of Pakistan, the Secretary of Finance, the Additional Secretary, and other individuals.

The Finance Minister was greeted at the airport by Pakistan’s Ambassador to the United States, Masood Khan, and Embassy staff.

The Finance Minister will meet with representatives of the World Bank and IMF while he is in the US.

The IMF and Pakistan are expected to negotiate next week, according to sources.

Sources claim that Islamabad will apply for a new credit package from the IMF.

The Finance Minister’s itinerary also includes meetings with members of think tanks and the world press.

Last month, Pakistan and the IMF came to a staff-level agreement over the third and final review of the $3 billion stand-by arrangement. Should the board of the global lender approve this deal, Pakistan will get approximately $1.1 billion.

Although a specific date has not been determined, the IMF board is anticipated to evaluate the case in late April, according to a spokeswoman.

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Pakistan’s petrol prices are anticipated to rise.

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The Oil and Gas Regulatory Authority (OGRA) will not disclose the anticipated increase in fuel prices until its work is finished, according to sources.

Prime Minister Shehbaz Sharif will receive the summary of the petrol price, and sources further stated that the new pricing will be revealed following his approval today.

Noteworthy to highlight is that Pakistan was previously ordered by the International Monetary Fund (IMF) to impose an 18% General Sales Tax (GST) on gasoline.

Details indicate that Pakistan was requested by the Monetary Fund to stop reducing sales tax on all goods, including gasoline.

To boost tax revenue, Pakistan’s recently elected government should impose a sales tax on petroleum items in addition to a Rs 60 charge.

High-speed diesel (HSD) was reduced by Rs3.32 per litre on March 31 but petrol prices increased by Rs9.66 per litre by the government.

In contrast to the reduction in the price of high-speed diesel (HSD) to Rs282.24 from Rs278.92, the price of gasoline jumped to Rs289.41 per litre.

The adjustments were brought about by a commensurate increase in the price of gasoline and a decline in the price of HSD on the global market, according to a statement released by the Finance Ministry.

According to the statement, the adjustment was made in accordance with government policy, which transfers pricing differences from the foreign market to the home market.

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