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Petrol price may reduce by Rs10-15 per litre on rupee strength

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  • The price of diesel may be slashed by Rs2 per litre.
  • OGRA to meet for price revision for next fortnight.
  • IMF reservations could cause hurdles in price cut.

KARACHI: The improvement in the exchange rate, mostly in the favour of local currency, is likely to bring the prices of petroleum products down in the next fortnightly review by the oil sector regulator.

The Oil and Gas Regulatory Authority (OGRA) will meet soon to revise the petroleum prices for the next fortnight starting October 16, 2022.

If the government decides to pass on this rupee-dollar parity impact to the end consumers, the price of petrol may be slashed by an estimated Rs10-15 per litre and that of diesel by Rs2 per litre, according to industry sources.

The rupee fell for the second straight session on Thursday as dollar demand from importers outpaced greenback sales by exporters, who chose to sit on the sidelines in anticipation of range-bound trading in the local currency going forward, dealers said.

However, the sources added that this facilitation could be delayed owing to International Monetary Fund’s (IMF) reservations over the petroleum subsidy as Pakistan had agreed with the lender of the last resort to gradually add Petroleum Development Levy (PDL) to the prices of fuels.

The addition of PDL will offset the exchange rate impact.

According to the working of the oil industry, all petroleum prices are showing a declining trend worldwide; however, it is not clear if the government would pass on the impact or offset it by raising taxation.

Oil prices traded about 2% higher on Thursday, reversing course, as low levels of diesel inventory ahead of winter helped investors shrug off higher-than-expected stocks of crude and gasoline.

Analysts say Finance Minister Ishaq Dar seems to be following a populist policy and may avoid burdening the masses further at least for now, doing good on the word that he gave before assuming the office of finance minister.

There’s a chance that the finance minister might pass the impact of a global downtrend and a stronger rupee if world markets continued to retreat.

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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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