Business

Rupee expected to trade at 216 against dollar in next 10 days

Published

2 years ago

Farwa

Analysts predict multilateral creditor’s assistance will strengthen rupee.
Rupee expected to trade at 216 to the dollar in next 10 days.
Analysts see interest rates in US topping 5%.

KARACHI: Rupee is likely to appreciate against the US dollar in the coming week, depending on the expected inflows from the Asian Development Bank (ADB) and Pakistan’s removal from the Financial Action Task Force’s (FATF) grey list, The News reported.

The local currency dropped against the dollar by 0.89% this week in the interbank market. However, in the final trading session on Thursday, the rupee drove up to 220.84 due to positive news from the ADB and FATF. It closed at 218.89 on Monday.

Multilateral creditors’ assistance in the wake of the floods would help increase foreign exchange reserves and strengthen the local currency, the analysts believe.

As of October 14, the forex reserves held by the State Bank of Pakistan stood at $7.59 billion — enough to cover about one month of imports.

The rupee is expected to trade at 216 to the dollar in the next 10 days and 210 to the dollar in the following 30 days, according to Tresmark, a terminal that monitors live prices of financial markets.

“This is because of ADB-related inflows of $1.5 billion in the coming week and $2 billion of inflows in the first week of November. Of course, this would not have been possible without the finance minister’s undervalued rupee mantra,” Tresmark said in a client note.

But the real test for the rupee would be six months from now, it added.

Analysts see interest rates in the US topping 5% (last seen in 2008) and a relentless surge of the dollar.

While major currencies unanimously have a bearish bias, markets are forecasting the Indian Rupee to be at 95 per dollar, the Bangladesh Taka to be at 115 per dollar, and the Yuan to keep weakening. Dollar strength is one factor, but the global recession remains a much bigger concern.

“While CAD (current account deficit) for September was almost at breakeven, economists are looking at a 15-20% drop in exports, plus a 5% drop in remittances,” it said.

According to them, import compression and slowing down the economy further would be an ongoing requirement to sustain the economic winter, it added.

The rupee weakened during the outgoing week marginally on the back of the settlement of smaller letters of credit. Market estimates that about 50% (or around $600 million) still remains to be processed.

“The interbank market is also completely out of dollar liquidity, as can be seen in multi-month lows in swap premiums. Premiums for 1, 3, and 6 months are -2 (down from 130), 25 (down from 390), and 175 (down from 750) respectively,” it said.

In a positive development, the FATAF on Friday removed Pakistan from its list of countries that are under “increased monitoring” known as the “grey list”. This would help boost the nation’s reputation and get a credit rating upgrade from the global rating agencies.

Since the International Monetary Fund (IMF) included the implementation of FATF action plans as a structural benchmark, the removal would make it possible for Pakistan to successfully complete the next review of the IMF’s Extended Fund Facility.

However, the global rating agency Fitch cut Pakistan’s sovereign credit rating by a notch to ‘CCC+’ from ‘B-’, citing further deterioration in the country’s external liquidity and funding conditions and a decline in foreign exchange reserves.

The decrease comes three months after Fitch downgraded the country’s outlook from “stable” to “negative” and revised the ranking to B-. Fitch typically does not assign outlooks to sovereigns with a rating of ‘CCC+’ or below.

Business

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

Published

3 hours 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

3 hours 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.