Business

Rupee continues to strengthen against dollar as Dar takes charge of finance ministry

Published

2 years ago

Farwa

Rupee continues gaining ground against dollar.
Rupee gains 1.76, closes at 232.12 per dollar.
Analysts cite return of Dar as reason behind increase.

KARACHI: The Pakistani rupee continued Wednesday to gain ground for the fourth consecutive session as the dollar’s slide persisted after federal minister Senator Ishaq Dar took charge of the finance ministry.

In the interbank market, the rupee gained 1.79 to close at 232.12 per dollar, according to the State Bank of Pakistan (SBP) after it increased its value by 7.53 in the ongoing week.

Currency dealers and analysts have cited that the return of Dar — a close aide of PML-N supremo Nawaz Sharif — to Pakistan to take charge as the finance minister has helped improve sentiment and the fall in international commodity prices boosted the rupee’s rise.

The current account deficit — fortunately — will likely remain in check on account of declining international commodity prices and administrative measures taken by the government.

Inflation, too, has most likely peaked and is expected to come down over the coming months, The News reported.

Talking to Geo.tv, economist and former adviser to the federal ministry of finance Dr Khaqan Hassan Najeeb said the first aspect is a change in market sentiment driven by a leadership change at the finance ministry.

“The new team is regarded to be more conscious of rupee movement and thus leaning to more orderly movement,” the former adviser said.

Secondly, he noted that some fundamentals have improved, especially a decline in oil prices as well as other key commodity prices, which may help reduce the quantum of imports.

“Thirdly, the confirmation by multilateral lenders to extend flood support is a market supporting development,” Dr Najeeb said.

Lastly, a bit farfetched but the possibility of reconsideration and leniency in some conditions by the International Monetary Fund (IMF) due to flood impact is driving a positive sentiment toward the rupee, Najeeb added.

Alfalah’s head of research Fahad Irfan said Dar would not have the kind of free hand he had in his previous term.

“The IMF, in general, has been much stricter in terms of policy implementation. Most importantly, Pakistan now has a free exchange rate regime, even otherwise, the country has record low forex reserves with no room to burn them to control the exchange rate,” he said.

“However, administrative curbs and stronger checks on manipulation and the smuggling of dollars out of Pakistan are still possible,” Irfan added.

He said the rupee was expected to regain some lost ground. However, with the fear of Dar, the pace of appreciation has accelerated.

He noted that changes in key positions, at times of catastrophic floods and an extremely fragile economic environment, might help Dar regain some lost popularity; however, this might slow down policymaking.

Dar maintained the rupee at a parity of 100 per dollar for his entire term (2013-2017) and kept the policy rate at its historic low of 5.75% from May 2016 to December 2017.

This lethal combo was the main reason why Pakistan posted a historic high current account deficit of $19.2 billion or 6.3% of the gross domestic product in FY2018 and eroded foreign exchange reserves to just 2 months of import cover, according to Irfan.

Dar seeks ‘time’ to stabilise Pakistan’s economy

Senator Dar has defended former finance minister Miftah Ismail’s policies as he sought time to stabilise Pakistan’s economy.

In a press conference outside an accountability court, Dar said Miftah is part of the government’s team and his efforts helped save the country from a looming default threat.

“Miftah put in all his efforts and through them, he saved Pakistan from default. The mess that was made in the last three to four years could not be cleared in four months,” he said.

Miftah had to take unpopular decisions, including raising power tariffs and rates of petroleum products, to restart the stalled International Monetary Fund (IMF) programme.

The belt-tightening measures invited criticism from the coalition rulers and Miftah received flak from his party as well.

In a separate conversation with journalists upon his arrival Dar said that he needed time to fix Pakistan’s economy.

Business

The amount of trade between Saudi Arabia and Pakistan hits $700 million.

Published

47 minutes ago

Farwa

Through the Special Investment Facilitation Council (SIFC), Pakistan’s trade connections with Saudi Arabia have grown significantly, with bilateral trade volume rising from $546 million to $700 million and exports to the Kingdom growing by 22%.

As bilateral economic cooperation continues to grow, Saudi investors have shown a strong interest in Pakistan’s construction, energy, agricultural, and information technology sectors. The objective for exporting IT services between the two countries has been raised from $50 million to $100 million.

Saudi Arabia has set up a help desk dedicated to making it easier for Pakistani IT companies to register in the Kingdom in order to expedite commercial procedures. The goal of this program is to speed up economic collaborations between the two countries and lower administrative barriers.

The well-known Saudi restaurant chain AlBaik has revealed plans to open locations in Pakistan, which is a big step for the food service industry and should lead to the creation of new job possibilities in the area.

Officials have noted that stronger business links between the two countries lead to greater economic stability, and the SIFC has played a crucial role in promoting these trade advancements. For bilateral trade and investment projects, the Council remains a crucial facilitator.

According to a trade official with knowledge of the developments, “the establishment of dedicated support mechanisms, such as the help desk for IT companies, demonstrates a commitment to long-term economic partnership,” The goal of these programs is to improve the conditions for commercial collaboration between the two nations.

The increasing amount of trade and the diversity of investment sectors show that Saudi Arabia and Pakistan’s economic ties are changing as both countries seek to deepen their business alliances in a number of industries.

Business

After more than 50 years, Bangladesh and Pakistan resume direct trade.

Published

54 minutes ago

Farwa

After more than 50 years, the two governments will resume direct bilateral trade, with Bangladesh’s food ministry announcing Sunday that it will receive a supply of 25,000 tonnes of rice from Pakistan next month.

After former Prime Minister Sheikh Hasina was overthrown last August, relations between Bangladesh and Pakistan have begun to improve after decades of tense relations.

Since then, there have been increased bilateral interactions between Bangladesh and Pakistan. Nobel laureate Muhammad Yunus, the interim government’s senior adviser, has met twice with Pakistani Prime Minister Shehbaz Sharif.

According to the food ministry, Dhaka completed an agreement earlier this month to import grains from Pakistan.

“On March 3, the first shipment of 25,000 tonnes will reach Bangladesh,” Zia Uddin Ahmed, a ministry assistant secretary, told Arab News.

“This is the first time that Bangladesh has started importing rice from Pakistan at the government-to-government level since 1971.”

Following direct maritime contact between the two South Asian countries in November—a Pakistani cargo ship stopped in Bangladesh for the first time since 1971 with imports and exports arranged by private companies—their trade relations grew.

Resuming trade with Pakistan is a significant step for Bangladesh, according to Amena Mohsin, a lecturer at North South University and a specialist in international relations.

“We want to see progress in our bilateral relationship with Pakistan. Most significantly, we are currently going through a low point dispute with India, even though we constantly diversify our partnerships.

This most recent move to purchase rice from Pakistan is really significant in this context,” she told Arab News.

Business

The total amount of Pakistan’s liquid foreign reserves is $15.95 billion.

Published

3 days ago

Farwa

As of February 14, Pakistan’s total liquid foreign reserves were $15,947.9 million, with the State Bank of Pakistan’s (SBP) holdings being $11,201.5 million.

Official figures for the week ending February 14, 2025, show that the central bank’s liquid foreign exchange reserves rose by $35 million to $11,201.5 million.

Commercial banks maintained net foreign reserves of $4,746.4 million during the period under review, according to the breakdown of foreign reserves.

The nation’s total liquid foreign reserves as of the week ending February 07, 2025, were $15,862.6 million.

Of these, the central bank held $11,166.6 million in foreign reserves, while commercial banks kept $4,696 million in net reserves.