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Rupee snaps 5-day long winning streak

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2 years ago

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  • Rupee settles at 262.51 per dollar in interbank market.
  • Local unit closes open market trade at 269.
  • Pakistan’s REER index fall to 92.8 in January.

The Pakistani rupee snapped its five-day-long winning streak on Tuesday as the local currency shed 0.24% in the interbank market.

The local unit settled the day at 262.51 against the US dollar in the interbank market after a decline of Rs0.63 compared to Monday’s close of 261.88.

The last cycle of currency devaluation pushed Pakistan’s real effective exchange rate (REER) to 92.8 in January 2023 from 96.2 a month earlier, data from the State Bank of Pakistan (SBP) showed.

The decline in the REER — an index of the price of a basket of goods in one country relative to the price of the same basket in that country’s major trading partners — is driven by the rupee’s massive depreciation against the US dollar during the month of January.

In January, authorities decided to remove the cap on the exchange rate in a bid to meet one of the key lending conditions set by the International Monetary Fund (IMF) for the revival of its stalled $6.5 billion loan programme.

However, the rupee has maintained a rising trend in the last few days. Meanwhile, in the open market, the domestic currency loosed Rs1.25 to settle at 269 per dollar on Tuesday, according to the Exchange Companies Association of Pakistan.

Amid other developments, the National Assembly passed the IMF-dictated Rs170 billion Finance (Supplementary) Bill, 2023. 

Globally, the dollar index, which measures the US currency against six other rivals, was last at 104.11, just below a six-week high of 104.67 touched on Friday.

The market is now pricing US interest rates to peak at 5.30% in July and remain above 5% by the end of the year, moving away from expectations of deeper rate cuts this year. 

The yield on 10-year Treasury notes was up 2.3 basis points to 3.852%, after touching a three-month high on Friday. The yield of the two-year US Treasury paper, which typically moves in step with interest rate expectations, was up 3.5 basis points at 4.658%.

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Business

Trade ties between Pak-Oman: Both nations decide to activate “Joint Business Council”.

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20 hours ago

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Jam Kamal Khan, federal minister for commerce, visited Oman Chamber of Commerce and Industry in Muscat alongside chairman Faisal Abdullah Al Rawas.

To enable closer economic collaboration, both sides decided during the meeting to activate joint Business Council between OCCI and the federation of Pakistan Chambers of Commerce and industry.

Concurrent with the conference, the Embassy of Pakistan arranged a b2b networking event in association with OCCI to gather Omani Businessmen and Pakistani Business Delegates investigating trade prospects.

Speaking on the occasion, Jam Kamal Khan said, “Our present trade figures do not fairly represent the depth of our connection. We can quickly raise the current Trade volume to two or three times its present level by just eliminating logistical and communication barriers.

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Business

Despite economic gains, PSX remains strong.

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Amidst the ongoing negotiations with the International Monetary Fund (IMF) regarding a loan tranche, the Pakistan Stock Exchange (PSX) has resumed its upward trajectory in recent days.

The KSE-100 Index gained 600 points on Friday, the penultimate working day of the business week, and then increased to 115,730 points as traders showed confidence and engaged in trading.

After experiencing fluctuations, the PSX gained strength on Thursday, as the major index surpassed 115,000 points.

The KSE 100-Index closed at 115,094.23 points after gaining 1,009.70 points, or 0.89 percent. 115,247.39 was the intraday high, and 14,429.93 was the lowest.

According to experts, one important factor is Moody’s Ratings’ upgrade of Pakistani banks. Investor confidence has also increased due to the expectation of a positive conclusion from the negotiations with the International Monetary Fund (IMF).

In its assessment, Moody’s stated, “We have shifted our outlook on Pakistan’s banking system from stable to positive to reflect the banks’ resilient financial performance as well as improving macroeconomic conditions from very weak levels a year ago.”

The major index of the Pakistan Stock Exchange (PSX) surpassed 115,000 on Thursday, indicating a surge in the market.

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Pakistan resolves to meet benchmarks, and the IMF promises economic help.

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In the midst of an ongoing economic review, the delegation from the International Monetary Fund (IMF) has promised Pakistan economic cooperation.

In order to assess the delivery of a $1 billion tranche under the $7 billion rescue deal, IMF officials are now in Pakistan.

Today, March 14, marks the completion of the two-week-long economic review and negotiations between the global lender’s representatives and Pakistani authorities.

The team met with Finance Minister Muhammad Aurangzeb at the Ministry of Finance for the last round of negotiations.

The nation’s economic team’s actions and performance were praised by the visiting officials.

Aurangzeb promised the IMF during the conference that all economic goals would be met. He said that as long as the loan program is in place, no goals would be broken.

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