Business

Rupee to remain under pressure next week as dollar demand grows

Published

1 year ago

Farwa

Import backlogs and dividend payments will lead to more pressure.
Market bracing for the rupee to cross past the historic level of 300.
There are fears interim caretaker setup will be in place for a long.

KARACHI: The Pakistani rupee is expected to remain under pressure during the next week due to an increase in dollar demand as a result of the clearing of import backlogs and dividend payments, traders said, according to The News.

Fears that the caretaker administration will be in place for a long time and that this year’s elections may not be held as planned are likely to weigh on sentiment towards the rupee.

The rupee fell by 1.46% this week against the dollar in the interbank market. The rupee’s value against the dollar was 291.51 on Monday, but it fell further to end the week at 295.78 on Friday.

“The rupee is expected to continue to decline in the coming days due to the demand for dollars created by the release of delayed import and dividend payments,” a foreign exchange trader told The News.

“The import restrictions have been eased in line with the requirements of the International Monetary Fund. There was a backlog of payments before the IMF’s stand-by arrangement because there were not enough foreign exchange reserves,” the trader added.

The market is driven by supply and demand, with no intervention from the central bank, according to the trader.

The State Bank of Pakistan said in its July monetary policy statement that the “market-determined exchange rate will continue to serve as the first line of defense against external shocks and support reserve build-up”.

However, Pakistan’s current account balance ended its four-month streak of surpluses in July with a deficit of $809 million. Increased imports were the main reason.

The foreign exchange reserves held by the SBP slightly rose by $12 million to $8.05 billion in the week ending August 11.

The market is bracing for the rupee to cross past the historic level of 300 per dollar, said Tresmark in a client note on Saturday.

“This appears to be the market consensus,” the firm said.

“However, in our opinion, there is a material likelihood of an ad hoc hike in interest rates, which may relieve some pressure off the rupee. Essentially, we expect the rupee to trade the coming week under the 300 level,” it added.

“Our view also factors in the increase in swaps, which depicts healthy liquidity levels, and micro-management of imports, and is based on the premise that a weak rupee will further exacerbate the inflation problem.”

A quick analysis of the last five interim governments shows that the local currency has depreciated every time, with an average of about 6%, according to Tresmark.

The currency also depreciated, every time, in the first three months that the newly elected government came in, averaging about 3%.

“Whereas interest rates increased by an average of 80 basis points in the interim government phase, but stayed largely stable in the first 3 months of elected government,” the firm noted.

Business

SFD and Pakistan Sign Two Deals Totaling $1.61BLN

Published

1 day ago

Farwa

Two agreements totaling $1.61 billion have been inked by Pakistan and the Saudi Fund for Development to improve their bilateral economic cooperation.

Business

Saudi Arabia and Pakistan sign an MOU to strengthen their auditing industry collaboration.

Published

1 day ago

Farwa

A spokesperson for the office of the Auditor-General of Pakistan (AGP) announced on Monday that the two countries have signed a Memorandum of Understanding (MoU) to strengthen cooperation in public sector auditing through improved cooperation between audit institutions of both countries, as well as training programs and the exchange of trainers.

This comes as a group from Saudi Arabia’s General Court of Audit (GCA), headed by GCA President Dr. Hussam bin Abdulmohsen Alangari, arrived in Pakistan on Sunday for a four-day visit.

The agreement was signed during AGP Muhammad Ajmal Gondal’s meeting with the Saudi delegates, aiming to strengthen audit cooperation, enhance knowledge-sharing, and improve governance, transparency and accountability in government spending.

Public relations officer Muhammad Raza Irfan of the AGP’s office told Arab News that the deal will further advance bilateral collaboration between Saudi Arabia and Pakistan in addition to enhancing professional ties between the two nations’ auditing institutions.

In a statement released from his office, AGP Gondal was cited as saying, “This collaboration marks a significant step toward fostering international cooperation in auditing.”

“The exchange of ideas and methodologies will undoubtedly strengthen our capacity to meet emerging challenges and set new benchmarks for public accountability.”

Discussions at Monday’s meeting focused on fostering closer ties between the Supreme Audit Institutions (SAIs) of Pakistan and Saudi Arabia, sharing innovative audit methodologies, and planning collaborative initiatives for the future, according to the AGP office.

The two parties decided to increase their knowledge of theme, environmental, and impact audits as well as to exchange best practices in audit standards, performance audits, and citizen participation audits.

The statement added, “It also agreed to exchange trainers, address new auditing challenges, plan cooperative audits, including a performance audit on the oil and gas sector in 2025, and work together on training programs.”

Both sides reaffirmed their shared commitment to promoting transparency, accountability and excellence in public sector auditing.

Business

The government chooses to continue the PIA privatization process.

Published

1 day ago

Farwa

The Pakistan International Airlines (PIA) privatization process will be restarted by the federal government, and expressions of interest would be requested within the month. Officials stated that the Prime Minister’s Committee on Privatization will convene to make the final decision.

Usman Bajwa, the secretary of the Privatization Commission, gave a briefing on the updated procedure to the National Assembly Standing Committee on Privatization. Additionally, he disclosed that airlines other than PIA are now able to compete with regional carriers thanks to IMF-approved aircraft tax concessions.

Farooq Sattar, the chairman of the privatization committee, underlined the importance of giving PIA workers at least five years of job security. Employee protection will continue to be a top priority and will be resolved prior to bidding, the Privatization Commission promised.

PIA’s liabilities totaling Rs650 billion have already been assumed by the government, and an additional Rs45 billion in outstanding debts must be paid before the privatization process can begin. As of the now, PIA has assets around Rs155 billion and liabilities worth Rs200 billion. It will be necessary for the new buyer to expand the fleet by 15 to 20 aircraft.

Additionally, the Privatization Committee has sought a timeline for the privatization of Faisalabad, Gujranwala, and Islamabad Electric Supply Companies. Officials stated that after the appointment of a financial advisor, the privatization process for these companies will accelerate.