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Pakistani rupee’s massive gains against dollar to be short-lived: Goldman Sachs

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1 year ago

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  • Market will continue to require a premium for Pakistani rupee ahead of elections, says analyst
  • Local currency staged remarkable comeback last month.
  • Appreciation of Pakistani rupee will likely be short-lived.
  • Risk remains amid possibility of unrest ahead of elections.

The recent massive appreciation in the value of Pakistani currency against the US dollar will fizzle out amid financing gaps, Bloomberg quoted Goldman Sachs Group Inc. as saying on Thursday.

The local currency staged a remarkable comeback from its record low earlier last month, becoming the world’s best-performing currency in September due to a crackdown launched by authorities against hoarders and currency smugglers.

“The recent appreciation of the Pakistani rupee will likely be short-lived, given soaring interest costs and only short-term arrangements with the International Monetary Fund and bilateral financing to support the external balance,” Goldman analysts led by Kamakshya Trivedi wrote in a Wednesday report.

“The market will continue to require a premium for Pakistan’s rupee ahead of elections.”

The rupee has surged almost 9% since late August, making it the best performing currency globally after Afghanistan’s afghani, as authorities cracked down on the illegal dollar trade.

But risk remains as investors brace for possible unrest as the nation prepares to hold national elections in the first few months of next year.

Inflows from exports and remittances also remain muted, making the nation more dependent on foreign aid from countries in the Middle East as well as China for dollar flows.

An IMF team is scheduled to visit Pakistan next week to review the nation’s economic performance ahead of a loan disbursement as part of its $3 billion bailout programme.

Analysts believed that the rupee is likely to trade in a narrow range of 275-285 per dollar until at least the next tranche of the IMF’s loan programme is finalised.

According to dealers, the currency recently lost ground against the greenback as a result of an increase in demand for dollars from importers, while exporters’ dollar sales slowed as they expected the rupee to settle at its current levels in the coming days.

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Business

Irfan Siddiqui meets with the PM and informs him about the Senate performance of the parliamentary party.

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2 days ago

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The head of the Senate’s Foreign Affairs Standing Committee and the PML-N’s parliamentary leader paid Prime Minister Muhammad Shehbaz Sharif a visit in Islamabad.

Senator Irfan Siddiqui gave the Prime Minister an update on the Parliamentary Party’s Senate performance.

Additionally, Senator Irfan Siddiqui gave the Prime Minister an update on the Senate Standing Committee on Foreign Affairs’ performance.

He complimented the Prime Minister on his outstanding efforts to bring Pakistan’s economy back on track and meet its economic objectives.

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Business

SIFC Increases Direct Foreign Investment: Investment in the Energy Sector Rises by 120%

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The Special Investment Facilitation Council is intended to help Pakistan’s energy sector attract $585.6 million in direct foreign investment in 2024–2025. The amount invested at the same time previous year was $266.3 million.

This is a notable 120% rise, mostly due to investments in gas exploration, oil, and power. Such expansion indicates heightened investor confidence and emphasizes the development potential in important areas.

The State Bank reports that foreign investment in other vital industries has increased by 48% to $771 million.

This advancement is a blatant testament to SIFC’s efficient investment procedure and quick project execution.

The purpose of the Special Investment Facilitation Council is to establish Pakistan as an investment hub by aggressively promoting regional trade and investment in the energy sector and other critical industries.

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Business

Discos report losses of Rs239 billion.

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When compared to the same period last year, the data indicates that discos have decreased their losses in the first quarter of the current fiscal year.

The distribution businesses recorded losses of Rs239 billion in the first three months of the current fiscal year, a substantial decrease from the Rs308 billion losses sustained during the same period the previous year.

Additionally, the distribution businesses’ rate of recovery has improved. It has increased to 91% in the first quarter of this year from 84% in the same period last year, indicating success in revenue collection.

Regarding circular debt, the Power division observed a notable change. Last year, between July and October, the circular debt grew by Rs301 billion. Nonetheless, this year’s first four months saw a relatively modest increase in circular debt, totaling about Rs11 billion.

These enhancements show promising developments in the electricity sector’s financial health in Pakistan, where initiatives are being made to accelerate recovery rates and slow the expansion of circular debt.

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