Business

Rupee completes one-month winning streak against US dollar

Published

1 year ago

Farwa

Military-backed crackdown helped local currency to gain against dollar.
On Sept 5, Pakistani rupee tumbled to 307.10 against the dollar.
Rupee expected to strengthen to 280 to the dollar: analyst.

The Pakistan rupee’s winning streak against the US dollar has completed one month today (Thursday) with the local currency gaining 23.50 against the greenback since September 5 in the interbank market — thanks to the military-backed crackdown against currency smugglers.

The local currency is hovering at 283.60 per dollar in the interbank market today, gaining further 1.8 against its counterpart.

On September 5, the Pakistani rupee tumbled to 307.10 against the dollar in the interbank market. Since then, the Pakistani rupee has been on a recovery after the military-backed crackdown launched a crackdown on currency smugglers, hoarders, and speculators.

A day earlier, the rupee closed at 284.68 to the dollar, 0.37% stronger than Tuesday’s close of 285.72.

According to analysts, the rupee kept increasing as a result of a decline in the black market’s demand for dollars.

“In my view, PKR appreciated against the dollar as illegal demand vanished after the crackdown,” said Samiullah Tariq, the head of research at Pak-Kuwait Investment Company.

In the days to come, Tariq thinks that the rupee would strengthen to 280 to the dollar. Mustafa Mustansir, the head of research at Taurus Securities said the main reason for the rise in the value of the rupee is the crackdown on the grey markets and illegal hoarding of dollars.

“Plus, we believe that the illegal flow of dollars to Afghanistan has also stopped,” Mustansir said. “Further, the restructuring of the exchange companies sector by the SBP has also had a significant impact. Overall, these measures have led to heavy selling of dollars in the open market. I think the rally will continue,” he added.

The rupee’s near-term outlook is expected to be positive, but its medium-term future course will be determined by the state of the country’s economic fundamentals, especially the conclusion of the International Monetary Fund’s review of the stand-by arrangement (SBA) and the position of the foreign exchange reserves. In late October or early November 2023, there will likely be an IMF review.

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.