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Rupee remains stable versus US dollar

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  • Rupee settles at 223.95 against US dollar in interbank market.
  • Local unit lost value in last few sessions but remained within 223 level.
  • PBC says expecting rupee to defy gravity is “unrealistic”.

KARACHI: The Pakistan’s rupee fell marginally against the US dollar on Monday, depreciating Re0.01 in the interbank market.

The rupee settled at 223.95 against the US dollar compared to its Friday close of 223.94 in the interbank market, according to the State Bank of Pakistan (SBP).

The rupee lost value in the last few sessions but remained within the 223 level as restrictions imposed over import payments, opening of letters of credit, and foreign-currency carrying limits on travellers meant the currency stayed administratively under control.

Analysts also believe it was a result of negative sentiment that was fanned by the shrinking dollar stash of the country.

However, the local unit is likely to bounce back later this week on expected inflows from the Asian Infrastructure Investment Bank (AIIB).

The Pakistan Business Council (PBC) in a note posted on their Twitter handle stated that expecting the Pakistani rupee to defy gravity (in view of its depleting forex position) is unrealistic.

“Bolstering rupee through administrative controls renders exports less competitive and imports (even curbed), cheaper. Where is the sense in this when we want the reverse — higher exports?” it said.

Tresmark last week’s client note stated that the State Bank of Pakistan (SBP) is expecting external flows from multilateral (such as World Bank, Asian Development Bank, AIIB and others), bilateral and other sources.

However, contrary to the dominant opinion, the platform for treasury markets said that despite some positives, the rupee weakening doesn’t seem to end soon.

The rupee/dollar parity could test previous highs if the pressure on the forex reserves is not eased, it noted.

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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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