Connect with us

Business

Rupee depreciates on low dollar inflows for second consecutive month

Published

7 months ago

on

  • Country’s ability to generate dollar loans shrank to normal: official.
  • Loans disbursement remained low in last 2 months.
  • Pakistan secured $3.52bn in July-September period.

The local currency has started depreciating against the US dollar as Pakistan received low dollar inflows in the shape of loans during the consecutive second month of September 2023, The News reported on Thursday.

In the first month, July 2023, Pakistan received $2.89 billion as reported by the Economic Affairs Division (EAD) but, if a disbursed loan of $1.1 billion by the IMF under the $3 billion Standby Arrangement (SBA) is included, the total disbursement touches the $4 billion mark.

“The country’s ability to generate dollar loans have shrunk to normal in the last two months, August and September, in which the disbursement of loans remained at $316 million and $320 million respectively,” sources confirmed to The News on Wednesday.

The military establishment, in consultation with intelligence agencies and law-enforcement agencies, launched a crackdown on moneychangers and speculators and the rupee-dollar parity improved substantially, but there was a limit to taking such administrative measures.

The economic managers failed to complement these administrative steps to ensure dollar inflows and after witnessing shrinking inflows, the administrative measures lost charm. So the rupee is depreciating against the US dollar again.

The dollar inflows in July 2023 witnessed a massive boost when after securing $1.1 billion from the IMF under the $3 billion SBA programme, Pakistan also obtained $2 billion in additional deposits from the Kingdom of Saudi Arabia. The government also secured guaranteed loans of $508.34 million for induction of fighter aircraft.

So far in the first quarter, July-September period, Pakistan secured $3.52 billion from all multilateral and bilateral creditors in the current fiscal year against $2.234 billion in the same period of the last financial year. The EAD had included disbursement of $1.16 billion from the IMF as part of its disbursement showed in July 2022, but the amount released by the IMF in July 2023 was not made part of the EAD-released foreign loans.

The multilateral creditors disbursed $490.48 million during the first quarter of the current fiscal year as the ADB provided $61.7 million and Asian Infrastructure Investment Bank (AIIB) $22.96 million. The EU and European Investment Bank (EIB) have not disbursed any amount so far in the current fiscal year.

The World Bank’s IDA lending stands at $240.93 million in the first quarter of the current fiscal year, while IBRD funding is hovering around $58.45 million in the same period of the current fiscal year. The Islamic Development Bank (IsDB) has so far disbursed $100 million for short-term goals in the current fiscal year.

Total disbursement from bilateral creditors stood at $324.05 million during the first quarter, July-September period of the current fiscal year, out of which the Kingdom of Saudi Arabia clinched the top position by making disbursement of $300 million loan in the shape of an oil facility on deferred payment.

China has disbursed just $0.39 million in the first quarter, $1.28 million by France, $0.77 million by Germany, $2.82 million by Japan, $4.85 million by Korea and $13.98 million by USA.

Through the Naya Pakistan Certificate, Pakistan has received $204.5 million in the first quarter of the current fiscal year. Pakistan also received a $2bn deposit from the KSA in the first three months of the current fiscal year. The government has so far remained unable to get any single penny through commercial loans despite making a projection of $4.5 billion and the same applies in the case of generating dollars through international bonds.

The government has sought $17.6 billion in the shape of foreign loans for the whole financial year. 

Now Islamabad would have to secure $14.1 billion in the remaining three quarters (Oct to June) to materialise the desired target to keep the foreign exchange reserves at comfortable levels. Otherwise, the balance-of-payment crisis might erupt anytime in case of derailment of the IMF programme.

Related Topics:
Continue Reading
Click to comment

Leave a Reply

Your email address will not be published. Required fields are marked *

Business

Pakistan’s gold prices are still declining; see the most recent

Published

5 days ago

on

By

The price of 10-gram gold reduced by Rs943 to settle at Rs207,733, while the price of gold dropped by Rs1200 to close at Rs242,300 a tola, according to the Sindh Sarafa Jewellers Association.

In the global market, the price of the precious metal fell by $10 to $2,349 per ounce, resulting in losses.

At 04:48 GMT, the spot price of gold had dropped by 0.2% to $2,354.77 per ounce. In the previous session, prices reached a two-week high.

American gold futures dropped 0.6% to $2,361.

Spot silver decreased by 0.4% to $28.03 per ounce, while palladium remained steady at $978.03 and platinum decreased by 0.1% to $992.89.

Continue Reading

Business

Pakistan and the IMF begin talks for a new loan.

Published

5 days ago

on

By

Pakistan is requesting a $6 to $8 billion bailout package from the international lender over the next three to four years to address its financial troubles.

A mission team led by Nathan Porter, the IMF’s Mission Chief in Pakistan, is meeting with a Pakistani delegation led by Finance Minister Muhammad Aurangzeb.

According to sources familiar with the situation, Islamabad may face more difficult options, such as raising power and gas bills.

Mr. Aurganzeb informed the IMF team that the country’s economy has improved as a result of the IMF loan package, and Islamabad is ready to sign a new loan programme to further develop.

The IMF mission expressed satisfaction with Islamabad’s efforts to revive the country’s struggling economy.

The IMF praised Pakistan’s economic growth in its staff report earlier this week, but warned that the outlook remains challenging, with very high downside risks.

The country nearly avoided collapse last summer, and its $350 billion economy has stabilized since the end of the last IMF program, with inflation falling to roughly 17% in April from a record high of 38% last May.

Continue Reading

Business

Petrol prices are likely to drop significantly beginning May 16.

Published

5 days ago

on

By

According to sources, the government is set to decrease petrol prices by Rs 14 per litre and diesel prices by Rs 10 on May 16 for the next fortnight’s revision.

Last month, the government reduced the price of fuel and high-speed diesel by Rs5.45 and Rs8.42 per fortnight, respectively.

The current fuel price is Rs288.49 per litre, while the HSD price is Rs281.96.

Meanwhile, oil prices fell further on Monday, as signs of sluggish fuel consumption and comments from U.S. Federal Reserve officials dimmed optimism for interest rate reduction, which may slow growth and reduce fuel demand in the world’s largest economy.

Brent crude prices down 25 cents, or 0.3%, to $82.54 a barrel, while US West Texas Intermediate crude futures fell 19 cents, or 0.2%, to $78.07 per barrel.

Oil prices also declined on signals of poor demand, according to ANZ analysts, as gasoline and distillate inventories in the United States increased in the week before the start of the driving season.

Refiners throughout the world are dealing with falling diesel profitability as new refineries increase supply and warm weather in the northern hemisphere and weak economic activity reduce demand.

Continue Reading

Trending