Connect with us

Business

Why is Pakistani rupee losing value against dollar?

Published

on

With the rupee falling to new lows, stakeholders are concerned that the weakening currency could open up Pakistanis to a new round of inflationary impact, which will hit the lower and middle classes the hardest.

No sector of the economy would be immune from the fallout of the steep devaluation of the local currency — which has lost about 20% this year, among the worst performers in the world.

The rupee has gained and lost value in the past and it will do so in the future as well but this time the curve has maintained its upward trend since quite a few months now.

Economists Ankur Shukla and Abhishek Gupta, in an analysis given on Bloomberg Economics, have compiled the reason why the Pakistani rupee was so weak.

The analysts said that the capital is fleeing Pakistan because there is a growing risk that the International Monetary Fund (IMF) will not deliver a bailout, which is needed for the country to avoid default in the fiscal year starting from July. They suspected that political unrest was probably one of the reasons the Fund was baulking as the aid has been stalled since November.

They also pointed out the impact of political tumult on the rupee, stating that the country’s leadership has been unstable since Pakistan Tehreek-e-Insaf (PTI) Chairman Imran Khan was ousted as the prime minister via a no-confidence motion vote in April last year.

“Khan’s arrest this month has escalated the face-off between him and the government, as well as the army,” they noted, recalling that the rupee plunged to a record low of 299 per dollar after Khan’s jailing but recouped its losses and settled at 285 after his release.

Warnings of a massive drop in the rupee are flaring up, with some analysts forecasting another 20% decline is possible. Both economist also cautioned that the currency will likely fall further if Khan and the government continue to clash and if the IMF chooses not to provide loans.

Adil Ghaffar, chief executive officer at Premier Financial Services Pvt in Karachi also told Bloomberg that therupee may slump to as low as 350 per dollar in June if Pakistan fails to secure the loan.

“The rupee trajectory remains subject to considerable uncertainty as market sentiment is fragile,” Farooq Pasha, an economist in Karachi, said, adding that politics will remain the key risk in the near-term until the elections.

Moreover, bond investors are also growing more nervous, with the extra yield they demand to hold Pakistan’s dollar bonds over US Treasuries climbing above 35% points to a record this month. 

Why is Pakistani rupee losing value against dollar?

Pakistan’s dollar bonds are trading at distressed levels, with notes due in 2031 quoted at about 34 cents on the dollar.

The country’s dollar stockpile, which stood at $4.3 billion in mid-May, is also not enough to cover even one month of imports despite heavy restrictions. 

Business

April FDI in Pakistan increased to $358.8 million, according to SBP

Published

on

By

The inflow for April was $358.8 million, up 177% from $132 million in April FY23. Still, that was 39% more than the $258 million from March.

China was the largest investor, with $439.3 million in FDI from the nation between July and April of FY24—the greatest amount—as opposed to $604 million during the same period of FY23. In April, China accounted for $177 million of the total investment.

With $51.93 and 51.89 million invested in Pakistan, the United Arab Emirates and Canada came in second and third, respectively.

The power industry was the main draw for foreign investors in FY24, which ran from July to April. This period’s FDI in the power industry was $637.5 million, compared to $776.2 million the previous year. From $338 million to $460 million this year, Hydel Power garnered more attention.

Continue reading: In FY23–24, Pakistan’s per capita income increased to $1680.

According to a separate data released on Wednesday, Pakistanis’ per capita income increased to $1680 in FY2023–2024.

The size of the national economy grew from $341 billion to $375 billion in the current fiscal year, according to figures made public by PBS.

Throughout this fiscal year, Pakistanis’ yearly per capita income increased by Rs 90,534; the monthly rise was Rs 7,544.

Continue Reading

Business

OGRA forbids the purchase or sale of inferior LPG cylinders.

Published

on

By

The 313 LPG marketing and 19 cylinder-producing companies received notices from the OGRA, which described the act of refilling inferior LPGO cylinders as harmful.

Avoid supplying LPG to unlicensed distributors, the OGRA has cautioned LPG marketing companies. Only approved distributors will be able to sell and buy LPG going forward, per the notification, which states that new SOPs have been developed for the LPG industry.

Additionally, the warning said that the decision was made in an effort to preserve both lives and the business in response to an increase in cylinder blast occurrences.

Price reductions of Rs 20 per kilogramme for liquefied petroleum gas (LPG) were implemented in Quetta on May 3.

There is a reduction of Rs 20 on LPG prices, which means that the price per kilogramme drops from Rs 280 to Rs 260.

The costs of LPG were reduced by Rs 20 per kilogramme earlier, bringing the total decrease to Rs 40 per kilogramme over a few weeks. This is something worth noticing.

Continue Reading

Business

PIA announces a significant student discount.

Published

on

By

According to an airline spokesman, the national flag carrier has recently raised the baggage allowance to 60 kg.

Currently, PIA flies one flight per week on Sundays between Islamabad and Beijing.

The discount may be useful to students who intend to spend their summer vacations in Pakistan or who wish to return home after earning their degrees.

Before, students who wanted to visit China could now receive a 27% reduction on their fares through PIA.

On Eid ul Fitr, the national flag airline also reduced the cost of domestic flights by 20% for both economy and executive economy classes.

Continue Reading

Trending