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Rupee breaks losing streak against dollar, makes minor gains

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KARACHI: Pakistan’s rupee Tuesday turned the losing tide on the dollar, bouncing off eight-session lows, dealers said.

The local currency gained Re0.24 or 0.11% against the greenback in the inter-bank market to close at 223.42. That compared to Monday’s close of Rs223.66

The country’s currency has shed Rs2 or 0.9% versus US currency during the last eight trading sessions. 

Analysts said that even the improvement in the country’s current account balance failed to cheer up the rupee. The current account deficit fell 68% to $567 million in October.

The market sentiment is negatively impacted by Pakistan’s growing risk of default on its obligations to repay foreign debt, the delay in IMF-Pakistan negotiations, and the absence of a timeframe regarding incoming financing from friendly countries, according to dealers.

The current account gap has reduced, but exports and remittances have taken a serious hit.

Inflows have dried down, and traders are keenly looking out for World Bank to send in aid money, so crucial at this time.

The general consensus in the money market remains downbeat.

However, positive news from the political and inflows front was seen setting the rupee’s direction down the line.

Dollar shortage

Zafar Paracha, Chairman Exchange Association of Pakistan (ECAP), sees the rupee languishing in the near future owing to multiple reasons.

“First off, there’s a shortage of dollars in the country. We have more buyers than sellers in the market,” Paracha said highlighting the dollar demand-supply issues.

He said the country was in dire need of big inflows and “as long as the international and bilateral lenders do not deliver on their commitments, the rupee is unlikely to recover. 

“One of the reasons that have stalled these inflows was the ongoing political uncertainty in the country.” he said adding, “While IMF is also not giving us any leverage and is tightening its conditions, adding to the economic woes”.

Another reason was that remittances from overseas workers were continuously falling, which was an upshot of the global recession. 

“This phenomenon has weighed on the savings of expats, resulting in lower amounts of foreign currency being sent home,” the ECAP official added.

Paracha also raised alarms over the thin foreign exchange stash with the central bank, fearing more fiscal pressure as deadlines for the repayments of maturing external debt and interest expenses were approaching fast.

The money dealers’ association leader pointed out that the grey market was also biting into the legal one.

“People are diverting to the illegal channels as they are offering better rates, which also need to be addressed,” Paracha said.

Dollar stable

The dollar steadied on Tuesday after rallying the previous day as investors flocked to the safe haven currency on worries over China’s COVID flare-ups, while bitcoin came under pressure after fears of fresh contagion from the collapse of crypto exchange FTX. 

The euro was up 0.14% to $1.0258 after an 0.8%loss on Monday, the sterling rose 0.19% to $1.1838, partially reversing its 0.6% fall, and the dollar was at 141.86 yen down 0.18% after a 1.2% gain.

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Changes in the US dollar’s value are directly correlated with variations in gold prices.

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The price of 24-karat gold in Pakistan increased by Rs1500 on Thursday, reaching Rs231,000 per tola. This was another jump in the price of gold in the country.

Dealers reported a comparable surge in the price of 10 grams of 24-karat gold, which is currently trading at Rs198,045 after rising by Rs1285. In addition, the cost of ten grams of 22-karat gold increased significantly, trading at Rs 181,541.

These fluctuations are strongly correlated with shifts in the US dollar’s value, demonstrating the tight connection between gold prices and exchange rates. This emphasizes how local gold markets are impacted by variables related to the global economy.

At Rs2,580, the price of 24-karat silver remains steady right now. The price of gold increased significantly on a global scale as well, rising by $14 to $2,214 per ounce.

It’s critical to understand that changes in the worldwide market can have a substantial impact on gold prices in Pakistan throughout the day. The gold rates that are offered are obtained from reliable sources, mostly situated in Karachi and Multan.

It is recommended that individuals seek the advice of nearby gold merchants and jewellers for the most precise and current information regarding gold prices.

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Pakistan pledged to finish building the TAPI gas pipeline.

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The minister discussed the importance of the TAPI gas pipeline project for Pakistan’s energy needs during a meeting with Turkmenistan’s ambassador to Pakistan, Atadjan Movlamov.

The Minister was congratulated by Ambassador Movlamov on taking office and his commitment to the project was noted.

Dr. Musadik Malik thanked the ambassador for his kind words, acknowledged the support, and promised to maintain the two nations’ friendship. The intergovernmental commission and working group meetings for the project this year were briefed by Atadjan Movlamov.

He invited the Minister to attend the Turkmenistan Energy Forum, which would take place in Paris the following month.

TAPI undertaking
The project is for the construction of a 1,680-kilometer pipeline with a 56-inch diameter that can carry 3.2 billion cubic feet of gas per day (bcfd) from Turkmenistan through Afghanistan and Pakistan to the border between Pakistan and India.

According to the terms of the TAPI agreement, Afghanistan would receive its portion of 0.5 billion cubic feet of gas per day, while Pakistan and India will each receive 1.325 billion cubic feet of gas per day.

In order to carry out the Turkmenistan-Afghanistan-Pakistan-India (TAPI) gas pipeline project, Pakistan and Turkmenistan inked a cooperative implementation plan in Islamabad on June 4.

Prime Minister Shehbaz Sharif and a delegation from Turkmenistan, led by Minister of Energy and Water Resources Daler Juma’a, were present at the ceremony.

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The price of gold is still rising in Pakistan.

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According to the All Sindh Sarafa Jewellers Association, the cost of 10 grams of 24 karat gold grew by Rs. 86 to Rs. 196,760 from Rs. 196,674, while the cost of 10 grams of 22 carat gold jumped to Rs. 180,363 from Rs. 180,284.

The price of silver per tola and ten grams stayed at Rs. 2,211.93 and Rs. 2,580, respectively.

According to the Association, the price of gold on the global market rose by $7 to $2,200 from $.2,193.

It is important to note that Pakistani and IMF personnel have agreed at the staff level on the second and final review conducted as part of Pakistan’s Stand-By arrangement.

The International Monetary Fund (IMF) and Pakistan have reached a staff-level agreement on the second and final review of Pakistan’s stabilization program, which is supported by the IMF’s US$3 billion (SDR2,250 million) SBA Agreement. This is according to the official statement released by a team led by Nathan Porter.

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