Business

Pakistan rupee outperforms Asian peers against US dolla

Published

1 year ago

Farwa

Value of other Asian currencies relative to the dollar decreased.
Rupee outperformed global currencies, recovering all of its losses in Sept.
The crackdown has worked in curbing the open market rate.

As a result of a crackdown on currency smuggling and illegal foreign exchange trade, the Pakistani rupee has become the best-performing currency in Asia so far this fiscal year, The News reported on Tuesday.

According to data based on the MSCI Asia Emerging and Frontier Markets Index released by Topline Securities on Monday, the rupee has appreciated by 1.7% versus the dollar between July 1 and October 9, 2023.

But at the same time, the value of the other Asian currencies relative to the dollar decreased. In relation to the dollar, the Malaysian ringgit plummeted by 1.4%, the Korean won by 2.5%, the Thai baht by 5%, and the Bangladeshi taka by 1.9%.

When Pakistan’s caretaker government took office in August, the currency was under tremendous pressure. But in September, the rupee outperformed global currencies, recovering all of its losses and rising by 6% against the dollar.

On September 5, the rupee plunged to a record low of 307.1 against the dollar, but since the country’s central bank and security forces started taking action the next day to stop black market activity, the rupee has recovered sharply. In just five weeks, the rupee has risen by about 9% against the dollar.

“The crackdown has worked in curbing the open market rate,” said Fahad Rauf, the head of research at Ismail Iqbal Securities. “The economic fundamentals have not changed. Any further appreciation would probably create another bubble. SBP should step in to buy dollars and encourage exporters,” he added.

In addition to a crackdown on illegal dollar transactions, the State Bank of Pakistan’s structural reforms related to foreign exchange companies, exporters selling dollars, and panic selling by hoarders have allowed the rupee to retain its upward trend.

The rupee closed at 281.65 per dollar in the interbank market on Monday. It ended at 282.69 in the previous session. Analysts expect the rupee to surpass the 280 per dollar level in the coming days. This assumption is due to a number of factors, including: the IMF appears to be moving towards approval; another tranche will give the rupee wings; the closure of the Afghan border has reduced smuggling, especially of gold, which was the primary means of wealth transfer; the current account is expected to show a surplus; and remittances are anticipated to come as a pleasant surprise.

The government’s attempts to eliminate the abuse of the Afghan Transit Trade (ATT) and the continued decline in oil prices will be very advantageous to the balance of payments, strengthening the rupee.

Business

Gold prices in Pakistan approach an all-time high.

Published

22 hours ago

Farwa

Following a substantial surge the prior day, gold prices in Pakistan are ascending to unprecedented levels with an additional gain on Thursday, coinciding with a rise in global precious metal rates.

The price of 24-karat gold in the local market rose by Rs700 per tola, reaching Rs277,900, as reported by the All-Pakistan Gems and Jewellers Sarafa Association (APGJSA).

Likewise, the cost of 10 grams of 24-karat gold increased by Rs600, currently priced at Rs238,254.

Globally, gold prices exhibited an upward trend, increasing by $7 throughout the day. The APGJSA reports that the international gold price was $2,682 per ounce.

Notwithstanding the increase in gold prices, the silver market exhibited stability, with the price of silver maintained at Rs3,050 per tola.

In the previous month, gold prices in Pakistan reached an unprecedented high of Rs 277,000 a tola, driven by substantial gains in the worldwide market.

Business

World Bank: Power industry subsidies soar by 400% in just five years.

Published

22 hours ago

Farwa

Ninety-four percent of domestic customers will benefit from the budgetary subsidy in 2024, according to a World Bank report, which credits the increase in protected consumers with contributing to the weight of subsidies.

In the current fiscal year, the electricity sector subsidy has increased by an astounding Rs. 954 billion, from Rs. 236 billion in the 2020 fiscal year to Rs. 1190 billion.

Notwithstanding changes, the circular debt has averaged Rs. 400 billion yearly over the last four years due to the incapacity to minimize losses and inadequate recovery of electricity payments.

According to the World Bank, the government must solve the fundamental problems in the power industry in order to lower the burden of subsidies and circular debt, as rising electricity prices and inadequate tax collection will only serve to worsen the circular debt crisis.

The rise in Pakistan’s power sector circular debt has raised worries from the World Bank (WB) despite an unprecedented increase in energy pricing.

Within the last six years, the debt has grown by 1241 billion rupees, according to the World Bank’s study. Between 2019 and 2021, the debt climbed by 1128 billion rupees.

The electricity sector’s circular debt has been increasing at an alarming rate, according to a World Bank analysis. Between 2022 and 2024, there was a substantial increase of 113 billion rupees.

Pakistan’s electricity industry has 2393 billion rupees in total circular debt as of 2024.

Restructuring is required to solve the circular debt issue, according to the World Bank.

Business

Final settlement: Govt to pay five IPPs Rs 72 billion.

Published

22 hours ago

Farwa

On October 10, Prime Minister (PM) Shehbaz Sharif declared that the agreements with five IPPS would be terminated in the first phase. Sources claim that the government will give Rs 15.5 billion to Rousch Power and Rs 36.5 billion to Hubco.

In a same vein, the federal government would pay Lalpir Power Rs 12.8 billion, Atlas Power Rs 15.5 billion, and Sapphire Power Rs 6 billion.

The sources state that late payment fees are not included in the settlement. With effect from October 1, the agreements with the five IPPs will be considered officially ended.

PM Shehbaz earlier remarked that the termination was carried out with the owners of the IPPs’ mutual permission while presiding over the federal cabinet meeting in Islamabad.

The Prime Minister notified the Cabinet that the only money that will be paid, interest-free, to these IPPs is the outstanding balance.

According to him, the national exchequer will gain over 411 billion rupees from the termination of these contracts, while power customers will save roughly sixty billion rupees.

According to Prime Minister Shehbaz Sharif, it was the result of the arduous teamwork of the entire government. In this regard, he also acknowledged the contributions and assistance of the associated parties. He specifically mentioned General Asim Munir, the Chief of Army Staff, who showed a personal interest in the situation.

The prime minister characterized the development as the start of a trip that will ultimately lead to the advancement and prosperity of the populace.

PM Shehbaz Sharif also brought up the assistance that the Punjabi and Federal governments gave to power users over the summer.