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Rupee breaks losing streak against dollar

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  • Pakistani rupee closes at 239.65 against US dollar.
  • Rupee’s losing streak breaks after 15 consecutive sessions.
  • Analyst cites correction in market for rupee’s strength.

KARACHI: The Pakistani rupee on Friday broke its losing streak against the dollar after continuously depreciating for 15 consecutive sessions as the economy suffers following catastrophic floods.

At the closing of the interbank market’s trade, the rupee gained Rs0.06 to reach 239.65, according to the State Bank of Pakistan (SBP), up in value from the previous session’s close of 239.71 — just 0.23 short of an all-time low.

Arif Habib Limited’s Head of Research Tahir Abbas told Geo.tv that the rupee’s strength came after a correction following the expected inflow of funds from multilateral money lenders.

Abbas said that the market responded to the news of the World Bank (WB) planning to provide $1.7 billion to Pakistan in terms of flood relief.

The analyst mentioned that the government being in talks with the International Monetary Fund (IMF) for relaxing the conditions of the current programme was also a positive indicator for the market.

Analyst Yousuf Rahman at KASB Securities told The News that debt servicing was one of the reasons behind the rupee’s consistent decline as gross financing needs for the year are estimated at $32 billion.

Rahman also noted that floods have forced the government to import vegetables, grains, and cotton to replace damaged crops — increasing the pressure on the rupee.

After recent floods added to the country’s financial crisis, the Financial Times, citing a UN policy memo, reported that Pakistan should suspend international debt repayments and restructure loans with creditors.

The memorandum, which the UN Development Programme will share with Pakistan’s government this week, states that the country’s creditors should consider debt relief so that policymakers can prioritise financing its disaster response over loan repayment, the newspaper said.

Floods have affected 33 million Pakistanis, inflicted billions of dollars in damage, and killed over 1,500 people — creating concern that Pakistan will not meet its debts. Pakistan earlier estimated damage at $30 billion, and both the government and UN Secretary-General Antonio Guterres have blamed the flooding on climate change.

The memo further proposed debt restructuring or swaps, where creditors would let go of repayments in exchange for Pakistan agreeing to invest in climate change-resilient infrastructure, FT said.

In line with the dominant trend over the last several weeks, the country’s foreign exchange reserves held by the State Bank of Pakistan (SBP) also declined by 3.21% to $8,346.4 million as of September 16.

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Pakistan’s gold price increases by an additional Rs. 800 per tola.

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The price of yellow metal in the local market hit Rs247,300 on the first working day of the week, following a rise of Rs800 in a single day.

The cost of ten grams of 24-karat gold increased by Rs686 on Monday, making the current price Rs212,020.

In addition, the cost of 10 grams of 22-karat gold increased significantly, trading at Rs194,351.

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.

The price of the precious metal dropped $16 on the international market on Monday, hitting $2,348 per ounce.

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A delegation from Pakistan travels to the US to bargain with the IMF for a new loan.

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The Pakistani delegation consists of the Governor of the State Bank of Pakistan, the Secretary of Finance, the Additional Secretary, and other individuals.

The Finance Minister was greeted at the airport by Pakistan’s Ambassador to the United States, Masood Khan, and Embassy staff.

The Finance Minister will meet with representatives of the World Bank and IMF while he is in the US.

The IMF and Pakistan are expected to negotiate next week, according to sources.

Sources claim that Islamabad will apply for a new credit package from the IMF.

The Finance Minister’s itinerary also includes meetings with members of think tanks and the world press.

Last month, Pakistan and the IMF came to a staff-level agreement over the third and final review of the $3 billion stand-by arrangement. Should the board of the global lender approve this deal, Pakistan will get approximately $1.1 billion.

Although a specific date has not been determined, the IMF board is anticipated to evaluate the case in late April, according to a spokeswoman.

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Pakistan’s petrol prices are anticipated to rise.

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The Oil and Gas Regulatory Authority (OGRA) will not disclose the anticipated increase in fuel prices until its work is finished, according to sources.

Prime Minister Shehbaz Sharif will receive the summary of the petrol price, and sources further stated that the new pricing will be revealed following his approval today.

Noteworthy to highlight is that Pakistan was previously ordered by the International Monetary Fund (IMF) to impose an 18% General Sales Tax (GST) on gasoline.

Details indicate that Pakistan was requested by the Monetary Fund to stop reducing sales tax on all goods, including gasoline.

To boost tax revenue, Pakistan’s recently elected government should impose a sales tax on petroleum items in addition to a Rs 60 charge.

High-speed diesel (HSD) was reduced by Rs3.32 per litre on March 31 but petrol prices increased by Rs9.66 per litre by the government.

In contrast to the reduction in the price of high-speed diesel (HSD) to Rs282.24 from Rs278.92, the price of gasoline jumped to Rs289.41 per litre.

The adjustments were brought about by a commensurate increase in the price of gasoline and a decline in the price of HSD on the global market, according to a statement released by the Finance Ministry.

According to the statement, the adjustment was made in accordance with government policy, which transfers pricing differences from the foreign market to the home market.

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