Business

Why is Pakistani rupee losing value against dollar?

Published

1 year ago

Farwa

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

An investigation was “launched” into PTA’s inability to get Rs. 78 billion back from Telcos

Published

22 hours ago

Farwa

The PTA has reportedly been instructed to reply to NAB by July 29. According to the enquiry, the national exchequer has suffered losses as a result of the delay in collecting dues.

The PTA has been asked to provide NAB with information about any pertinent records, court proceedings, and overdue bills. The NAB Karachi has summoned the PTA officials to appear with all pertinent documentation.

All of the principle sum has to be paid by the LDI firms, according to sources. But due to judicial stay orders, the collection of dues has been impeded.

These sources further state that a steering group has been established by the Ministry of IT to supervise the issue of dues recovery.

In a previous event, the tariffs levied on importing cell phones from outside were clarified by the Pakistan Telecommunication Authority (PTA).

Contrary to what some internet reports claim, PTA clarified in response to recent news regarding the tariffs on mobile phone imports that there hasn’t been a formal decision to remove these levies in Pakistan.

the PTA.Pakistanis living abroad will be the only ones free from these levies, according to the PTA. A SIM card can be inserted and the phone restarted to temporarily register a device for non-PTA mobile subscribers.

Business

Weekly inflation in Pakistan increased by 0.17 percent.

Published

22 hours ago

Farwa

The SPI for the week under review in the aforementioned group was reported at 321.95 points, as opposed to 321.40 points during the previous week, according to the PBS statistics.

The SPI for the combined consumption group saw a 20.09 percent increase in the week under review compared to the same week the previous year.

The weekly SPI includes 51 necessary items for every spending group and 17 urban areas, with a base year of 2015–16 = 100.

The SPI for the lowest consumption category, which is up to Rs 17,732, grew by 0.08 percent from 311.97 points to 312.22 points this past week.

0.18 percent,The index of consumption for the lowest consumption groups, which are Rs 17,732-22,888, Rs 22,889-29,517, Rs 29,518-44,175 and above Rs 44,175; increased by 0.13 percent, 0.15 percent, 0.18 and 0.19 percent, respectively.

Nineteen (37.25%) of the fifty-one commodities had price increases over the week, eight (15.69%) had price decreases, and twenty-four (47.06%) had unchanged pricing.

On a weekly basis, the following commodities saw significant price decreases: tomatoes (9.19%), onions (2.14%), LPG (1.04%), bananas (0.53%), wheat flour (0.35%), potatoes (0.17%), pulse masoor (0.16%), and bread (0.05%).

Chicken (4.80%), garlic (2.01%), pulse gramme (1.87%), eggs (1.71%), beef (0.93%), gur (0.89%), pulse moong (0.84%), fresh milk (0.45%), firewood (0.23%), and cigarettes (0.12%) were among the items whose average prices increased significantly week over week.

The commodities that saw a year-over-year decline were: wheat flour (31.75%); cooking oil (13.44%); vegetable ghee 2.5 kg (10.42%); vegetable ghee 1 kg (9.85%); mustard oil (8.33%); eggs (5.82%); rice basmati broken (4.15%); and tea package (2.52%).

Gas prices for Q1 (570.00%), onions (96.01%), pulse gramme (40.39%), powered milk (39.11%), garlic (34.61%), pulse moong (29.77%), men’s sandals (25.01%), beef (23.52%), salt powder (23.28%), pulse mash (22.50%), and energy saver (17.96%) were among the commodities whose average prices increased year over year.

Business

The price of gold has drastically dropped in Pakistan.

Published

2 days ago

Farwa

As per the All-Pakistan Gems and Jewellers Sarafa Association (APGJSA), the cost of 24-karat gold per tola decreased by Rs 2,300, standing at Rs 250,500.

A kilogramme of 24-karat gold costing Rs1,972 less at the local market, making it worth Rs2114,763. Ten grammes of 22-karat gold had a price decrease to Rs196,866 as well.

After losing a significant $43 during the day, the rate per ounce of gold on the international market also decreased. It currently stands at $2,370.

On Thursday, the price of 24-karat silver also experienced a decline, falling by Rs60 to settle at Rs2,860 petal.