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Rupee registers handsome losses in pre-monetary policy session

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  • In interbank market, rupee fell 2.01 or 0.93%.
  • The local unit closes at 216.66 against dollar.
  • Rupee fell 0.31% against greenback last week.

KARACHI: The Pakistan rupee lost ground against the US dollar Monday ahead of the monetary policy announcement — scheduled for today — and the speculations surrounding the International Monetary Fund (IMF).

In the interbank market, the rupee fell 2.01 or 0.93% against the dollar to close at 216.66, down from Friday’s close of 214.65, according to data from the State Bank of Pakistan (SBP).

The greenback traded at 213-214 during the outgoing week. It closed at 213.98 per dollar on Monday and finished at 214.65 on Friday. The rupee fell 0.31% against the greenback last week.

Economist and former adviser to the federal ministry of finance Dr Khaqan Hassan Najeeb said the local unit slipped by Rs2 against the dollar due to political developments and the strengthening of the dollar internationally.

“But we also know the economic situation remains challenging. SBP reserves are weak at $7.8 billion — hardly enough for over a month of imports,” he said.

Non-oil imports are curbed by SBP by rationing the opening of letter of credit (LC), the economist said, adding that oil is already in excess, so oil imports are low.

“Point being, we are operating in a restricted environment, and there would be import needs piling up.”

Getting flows including IMF money, multilateral and bilateral monies, and new foreign direct investment (FDI) is essential to normalise the balance of payments.

“Of-course exports drop and remittance slowdown in July must be looked at carefully.”

Talking to The News, a trader said that apart from forex inflows and outflows, the monetary policy decision will be instrumental to gauge the rupee’s future direction.

Another factor that weakened the rupee was a shortage of greenback in the open market, which moved up the rate of the interbank price of the dollar as well.

The government lifted a ban on the import of non-essential and luxury goods to meet a condition of the IMF ahead of the board’s meeting later this month to revive the loan programme.

However, it announced the imposition of heavy duties on completely built units cars, mobile phones, and electronic appliances to discourage imports.

The market will also evaluate the impact of opening up luxury imports on the rupee, according to traders.

The foreign currency reserves have started to recover. The foreign reserves held by the central bank slightly increased by $67 million or 0.9% to $7.9 billion as of August 12.

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Significant surge in the price of gold in Pakistan

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On Friday, the price of gold in Pakistan continued to increase.

According to the All-Pakistan Gems and Jewellers Sarafa Association, the price of 24-karat gold per tola has risen by Rs2,200, reaching Rs249,000.

The price of 10-gram 24-karat gold increased by Rs1,886, reaching a total of Rs213,477. On Thursday, the cost of 10 grammes of 22-karat gold was Rs195,687.

The global gold market likewise had a rising trajectory. As per APGJSA, the worldwide rate was $2,404 per ounce, showing a decline of $24 during the course of the trading day.

The local market witnessed constant silver prices at Rs2,900 per tola.

Market observers attribute the increase in gold prices to other variables, such as volatility in the global market, currency exchange rates, and economic conditions. The ongoing surge in gold prices is likely to impact investment choices and consumer behaviour in the near future.

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Gold prices in Pakistan have risen by Rs 1,200 per tola.

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The price of one tola of 24 carat gold rose by Rs1,200 and reached Rs246,800 on Thursday, compared to its previous sale price of Rs245,600 on the last trading day.

According to the All Sindh Sarafa Jewellers Association, the cost of 10 grammes of 24 karat gold rose by Rs1,029 to reach Rs211,591, compared to the previous price of Rs210,562. Similarly, the price of 10 grammes of 22 carat gold jumped from Rs193,016 to Rs193,959.

The price of silver remained unchanged at Rs2,900 per tola and Rs2,486.28 per ten grammes.

According to the association, the international market price of gold rose by $10, reaching $2,382 from $2,372.

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The federal government has declared wage and pension increments for its employees.

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The Ministry of Finance has formally declared a rise in the remuneration and retirement benefits of personnel working for the federal government, offering substantial economic alleviation.

According to the notification, personnel in grades 1 to 16 will experience a 25% increment in their salaries, while officials in grades 17 to 22 will be granted a 20% rise. The implementation of this modification will commence on July 1, 2024, and will be applicable to the employees’ fundamental remuneration.

In addition, retired federal government employees would receive a 15% rise in their pension payments. This increase is applicable to retirees from both the civilian and military sectors. It is important to mention that employees who retire on or after July 1, 2024, will also qualify for this pension rise.

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The 15% increase in pension will be computed based on the amount of pension received by retired employees after deductions. Nevertheless, the letter specifies that ad hoc aid will not be factored into the calculations for pension and gratuity.

Moreover, this increment will have no effect on the calculation of housing rent allowances for employees.

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