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Rupee breaks all records, plunges to 239.94 against US dollar

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  • Rupee closes at Rs239.94 against US dollar in interbank market.
  • Depreciates Rs3.92 against greenback in a single-day.
  • Analyst says higher dollar demand and outflows are taking a toll on currency.

KARACHI: The Pakistani rupee plunged to a new low on Thursday while continuing its downward spiral against US dollar in the interbank market despite Finance Minister Miftah Ismail assuring investors that the pressure on local currency will soon “vanish”.

Data released by the State Bank of Pakistan (SBP) showed that the local unit closed at a historic low of 239.94 against the US dollar — surpassing its last day low of 236.02 after depreciating by Rs3.92, or Rs1.63% today.

Speaking to Geo.tv, Arif Habib Limited’s Head of Research Tahir Abbas said the currency pressure continued today as well, amid higher dollar demand and outflows — mainly oil-related payments tagged with lower inflows.

Fears have risen about Pakistan’s stuttering economy as its currency fell nearly 8% against the US dollar in the last trading week, while the country’s forex reserves stood below $10 billion with inflation at the highest in more than a decade.

Alpha Beta Core CEO Khurram Schezad said that the US dollar is getting stronger in the global market almost against all the world currencies — and the rupee is not an exception.

In addition, he said, Pakistan’s external account issues are not settled as yet though imports are slowing.

He noted that although the International Monetary Fund (IMF) is on board for disbursement, the flows are yet to materialise as the Executive Board’s final approval is awaited.

“Global rating agencies have put a negative outlook on the economy, so that is an additional burden that is weighing in on the financial markets in general and forex market in particular,” he added.

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Over 600 points are added by PSX in intraday trading.

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Tuesday’s lunchtime trading on the Pakistan Stock Exchange saw favorable activity.

During intraday trading, the benchmark KSE-100 Index increased by 672.08 points, or 1.11%, and was trading at 61131.82 levels.

The KSE-30 Index was trading at 20,558.31 after adding 211.46 points, or 1.04%.

The Pakistan Muslim League-Nawaz (PML-N) and the Pakistan Peoples’ Party (PPP) had another round of discussions for the establishment of a central government the day before the rally in the local stock exchange.

In the meanwhile, Fitch Ratings has issued a warning, stating that the likelihood of default would rise in the event of a drawn-out discussion or the inability to reach an agreement with the International Monetary Fund (IMF).

According to the State Bank of Pakistan, which reported net foreign reserves of $8 billion as of February 9, 2024, up from a low of $2.9 billion on February 3, 2023, Pakistan’s external situation has improved recently.

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The smartphone app “Tajir Dost” to tax Pakistani businesses is anticipated to launch on February 22.

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The sources stated that the caretaker administration aims to include 3.5 million shops in the tax net by use of the “Tajir Dost” app.

They said that Anwaar-ul-Haq Kakar, the acting prime minister, has instructed the relevant authorities to conclude their engagement with the retailing bodies within a few days.

The introduction of the “Tajir Dost” smartphone app to impose taxes on several merchants was authorized earlier this month by the acting federal administration.

The smartphone application, created by Pakistan Revenue Authority Limited (PRAL), a division of the Federal Board of Revenue (FBR), is intended to serve as a registration tool for shops and dealers throughout the nation.

The app’s database will be updated with the traders’ information who have already registered with the FBR.

Previously, in December 2023, the Federal Board of Revenue (FBR) made history by collecting Rs1.021 trillion. After deducting refunds of Rs 38 billion that were given out that month, the FBR’s net collection increased to Rs 984 billion.

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SBP confirms the choice to use new currency notes was not influenced by the IMF.

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In response to recent rumours, Saleem Ullah, the deputy governor of the State Bank of Pakistan (SBP), said on Thursday that the International Monetary Fund (IMF) had no influence over the decision to release new currency notes.

Saleem Ullah underlined in an interview that printing new notes is a regular procedure carried out every 15 to 20 years to maintain the currency’s integrity.

He stressed that, in contrast to rumours, the deficit is expected to decline in the next fiscal year, in line with the goals of the new monetary policy.

“Every 15 to 20 years, new notes are printed,” he clarified. The new currency’s goal is to keep the note’s integrity intact.”

The SBP assured the public earlier this week that the current banknote series will continue to be in circulation despite the introduction of new currency notes, which it intended to implement over the course of the next two years.

Regarding the latest series of currency notes, the deputy governor clarified that they were launched in 2005 and were in circulation for three years.

He admitted that the procedure was time-consuming and estimated that because of the careful preparation required, it would take around two years to issue the first note.

In addition, he guaranteed that the new banknotes will have improved security measures because they would be made using contemporary technology. He gave information regarding the SBP’s effort to get public feedback on the new currency notes’ design, highlighting the fact that recommendations were being actively sought from the populace.

“There are three prizes for each denomination, and there are a total of seven denominations, hence 21 prizes,” he disclosed, highlighting the process’ openness. First place is worth Rs 1 million, second place is worth Rs 500,000, and third place is worth Rs 300,000.

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