Connect with us

Business

Why rupee tanked to historic low?

Published

on

The Pakistani rupee lost over Rs14, or 5%, against the US dollar in the outgoing week as the cash-strapped economy spirals deeper into a financial crisis amid challenges like looming debt default, shortage of dollars, unsustainable spending, uncontrolled inflation, and nine-year low foreign reserves.

Earlier during the week, the local unit advanced from a record low as the International Monetary Fund (IMF) team began negotiations with Pakistan over the resumption of its $6.5 billion bailout programme; however, Prime Minister Shehbaz Sharif’s rather concerning comments regarding the ongoing parleys sent the currency market reeling.

The PM on Friday said the Fund review mission was giving Finance Minister Ishaq Dar and his team a “very tough time” in the talks —  expected to conclude on February 9.

Following his comments, the market panicked and the rupee devalued by 1.89% (or Rs5.22) to a new all-time low of Rs276.58 against the US dollar on Friday compared to Thursday’s close of Rs271.38.

Cumulatively, the rupee slumped 3.14% (or Rs8.69) in three days, compared to Wednesday’s close of Rs267.89 — the rupee recovered as crucial talks with the Washington-based lender resumed.

Tresmark, in its weekly currency commentary, noted that the rupee fell sharply last week from 264 per dollar to 278.50.

“It seemed to have stabilised around the 270 level, until the prime minister and finance minister spoke out,” the financial terminal for real-time market rates, news, charts, financial data, and technical analysis stated.

It added that when PM Shehbaz said that the IMF was imposing harsh conditions and when the finance czar said they were looking for philanthropists for billions of dollars, “traders assumed that the leadership was still looking for avenues other than IMF or that they would waste more time in negotiating with them.”

“However, in our assessment, the premier may have been only trying to prepare other stakeholders and vote base for harsh steps and measures,” Tresmark said, adding that another important factor behind the rupee’s downfall was the steep decline in total reserves of the country which are now at $8.7 billion (down by $712 million).

PM Shehbaz is battling to keep the economy afloat amid dollar shortages, and political tensions deepen.

Pakistan — with a $350 billion economy — is seeking a crucial instalment of $1.1 billion from the lender of the last resort to avoid default.

Tresmark mentioned that until and unless traders don’t feel confident about things getting better, especially the situation of reserves, the rupee would continue to fall, irrespective of its level.

“Traders we spoke to think the first and second level of resistance of 280 per dollar and 285 per dollar will be breached in the coming week unless the IMF comes on board. They also feel that 270-275 per dollar is the fair level post-IMF agreement, and any outruns will be temporary and will get corrected once there is some visibility of inflow,” the commentary read.

Business

Pakistan Looks To China For Investment In Important Sectors: SIFC Encourages New Chinese Projects

Published

on

By

Due to the Special Investment Facilitation Council’s assistance, Chinese businessmen are showing a revived interest in Pakistan. Pakistan has recently sent high-ranking delegations to China to promote investment in industries such as renewable energy, medical equipment, leather, plastics, textiles, and plastics.

At port Qasim in Karachi, the Chinese solar panel manufacturer “Renesola Pakistan” intends to set up an assembly plant capable of producing up to 4 gigawatts of solar energy. An electric bike, scooter, and tricycle assembly plant is planned to be established in Khyber Pakhtunkhwa by the Xiamen Sino-Pak International consulting and investment firm.

Pakistan’s renewable energy sector is of interest to Hexing Electrical, and the Ruyi Shandong Group intends to develop textile parks that meet international standards. Pakistan will also see the establishment of factories by Rainbow Industries Limited and Shaoxing Chemical Industry.

An exploration memorandum on shale and tight gas potential has been inked by the oil and gas development business and CCDI.

Continue Reading

Business

Pakistan experiences an increase in cement exports.

Published

on

By

Relative to 570,692 tons in the same month last year, the data that was made public shows that the exports increased by 71.52 percent to 978,871 tons.

Still, domestic cement sales were down 18% in September 2024, continuing the downward trend.

The month’s total cement sales were 3.540 million tons, down from 3.751 million tons in September 2023, a 5.63 percent annual decline.

In terms of total sales, domestic sales decreased by 19.78 percent to 8.130 million tons between July and September of 2024.

At the same time, 2.140 million tons of cement were exported, a 22.19 percent increase. Even while exports have increased, domestic sales have decreased for the fourth straight month.

Continue Reading

Business

Pakistan’s deposit protection program now covers one million rupees.

Published

on

By

An increase in the guarantee sum for qualified depositors of member banks was announced by the Deposit Protection Corporation (DPC) on Tuesday. The increase was from Rs500,000 to Rs1 million.

All of the eligible depositors across the country would be afforded complete protection as a result of this improvement, which was approved by the board of directors of the DPC.

The decision was made with the intention of protecting the interests of depositors and fostering financial stability inside the country, according to the State Bank of Pakistan (SBP).

A whopping 77.7 million accounts held by member banks are now protected by the DPC as a result of this revised guarantee. This contributes to the protection of about 96% of the total account holders in the banking sector, which equates to approximately 80 million personal accounts.

A number of experts considered that the DPC’s guarantee was insufficient in protecting depositors, particularly during times of economic uncertainty. Previously, the DPC’s guarantee was restricted to a maximum of Rs500,000.

It is anticipated that the decision to raise the limit will boost the trust of depositors and encourage a greater number of persons to interact with the banking system. This means that the decision comes at a vital time.

To ensure that access to this safety net is uncomplicated and uncomplicated, it is important to note that the deposit protection facility is accessible to all eligible depositors at no additional cost.

To emphasize the significance of preserving a healthy banking environment, the guarantee will not be activated until the State Bank of Pakistan (SBP) declares a bank to be a failed organization.

The State Bank of Pakistan, also known as SBP Bank Bank depositors are protected by deposit protection charges (DPC) Deposit rates

Continue Reading

Trending