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No respite: Rupee continues to weaken against dollar, closes at 236.84

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  • Rupee has been under renewed pressure against US dollar this month.
  • It has lost 8.66 against the greenback during the week.
  • Market experts believe this is primarily due to strengthening US dollar index.

KARACHI: The Pakistani rupee continued to weaken against the US dollar on Friday as high demand for the greenback kept the local unit under pressure.

The local currency registered a decline for the 11th consecutive session, closing the week at 236.84 against the greenback after losing nearly Re1 or 0.41%. The dollar now stands only Rs3.1 short of the all-time high level of Rs239.94 on July 28, 2022.

The rupee has been under renewed pressure against the US dollar this month. Market experts believe this is primarily due to the strengthening US dollar index, alongside a rise in the import of food-related items.

The rupee — which has been continuously losing its value despite the revival of the International Monetary Fund (IMF) programme — weakening streak can be attributed to a host of reasons including low dollar inflows amid pressure for import and debt servicing.

Moreover, political uncertainty is also impacting the rupee value. Pakistan has not been able to receive financing from multilateral financial institutions, despite securing the funding from IMF last month, which has been putting pressure on the country’s forex reserves — which dipped $176 million, clocking in at $8.62 billion as of September 9, 2022.

However, it is not just the rupee, leading currencies of the world have also lost value against the US dollar in recent times, which was also affecting the Pakistani currency.

Foreign exchange reserves held by the State Bank of Pakistan (SBP) dipped by $176 million.

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In a first for history, PSX crosses the 77,000 milestone.

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At 77,213.31, the benchmark KSE-100 hit an all-time high, up 1,005.15, or 1.32%, from the previous close of 76,208.16.

The government’s readiness to seal an agreement with the International Monetary Fund (IMF) following the budget was cited by analysts as the reason for the upward trend.

Experts anticipate that in an attempt to bolster its position for a fresh bailout agreement with the International Monetary Fund (IMF), the budget for the fiscal year ending in June 2025 would set aggressive fiscal goals.

Budget for Pakistan, 2024–2025
Pakistan’s budget for the fiscal year 2024–25, with a total expenditure of Rs18.877 trillion, was presented on Wednesday by Minister of Finance and Revenue Muhammad Aurangzeb.

The Finance Minister, Muhammad Aurangzeb, outlined the budget highlights. He stated that the GDP growth target for the fiscal year 2024–25 is set at 3.6 percent, while the inflation rate is anticipated to stay at 12 percent.

He stated that while the primary surplus is anticipated to be 1.0 percent of GDP during the review period, the budget deficit to GDP is forecast to be 6.9 percent over the period under review.

According to the minister, tax income collection increased by 38% in the current fiscal year, and the province will receive Rs7,438 billion. The Federal Board of income expects to earn Rs12,970 billion in revenue for the upcoming fiscal year.

In contrast to the federal government’s projected net income of Rs9,119 billion, he stated that the federation’s non-tax revenue projections are set at Rs3,587 billion.

The federal government’s total outlays are projected to be Rs18,877 billion, with interest payments accounting for the remaining Rs9,775 billion.

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Pakistan currently has $14.38 billion in foreign exchange reserves.

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Pakistan’s commercial banks’ reserves, which stood at $5.28 billion at the conclusion of the week ending on June 7, rose by US$174 million, according to a central bank statement.

Reserving US$6.2 million less, the SBP now has US$9.10 billion in reserves. The causes for the decline in the reserves it had were not disclosed by the central bank.

The SBP released a statement that stated, “SBP reserves decreased by US$ 6 million to US$ 9,103.3 million during the week ended on 07-June-2024.”

The State Bank of Pakistan’s (SBP) foreign exchange reserves were reduced by US$ 63 million as a result of repaying external debt, with the reserves standing at US$ 9.093 billion as of earlier on June 6.

The central bank spokesperson said in a statement that as of the week that concluded on May 31, the nation’s total liquid foreign reserves were $14.31 billion.

In terms of net foreign reserves, commercial banks have US$ 5.22 billion of the overall foreign reserves, according to the SBP.

SBP reserves dropped by US$ 63 million to US$ 9,093.7 million during the week that ended on May 24, 2024, according to the announcement.

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In the local market, the price of gold plummets to Rs240,700/tola.

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Gold with a 24-karat purity level has dropped by Rs1200/tola on the local market.

Each tola of 24-karat gold is now selling for Rs240,700, with a further drop of Rs1029 bringing the price of 10 kilos of gold to Rs206,361. These figures are courtesy of the All Sarafa and Jewelers Association.

Meanwhile, after a $2 decline on the global market, one ounce of gold will be valued $2315.

A tola of gold was worth Rs 600 more on Wednesday.

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