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Rupee snaps three-day losing streak against dollar

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  • Local currency gains Rs1.28 against the dollar. 
  • Paracha says it was a “very good” day for economy.
  • ECAP official expects market sentiment to improve. 

The Pakistani rupee has kickstarted the week on a positive note against the US dollar as exporters encashed large amounts of payments, boosting the market sentiment.

The local currency gained Rs1.28 or 0.46% against the dollar in the interbank market to close at 275.29, according to the State Bank of Pakistan (SBP), up from Friday’s close of 276.58. Meanwhile, the rupee remained stable at 283 in the open market.

During the last week, the rupee plunged to a historic low against the dollar after Prime Minister Shehbaz Sharif said that the International Monetary Fund (IMF) was giving Pakistan “a tough time”.

In a video statement, Exchange Companies Association of Pakistan (ECAP) General Secretary Zafar Paracha said that Monday was “very good” for Pakistan’s economy as the rupee appreciated around 6 in the interbank market during intraday trade.

He said that the rupee’s recovery has started as the exporters, who had earlier stopped their payments, have encashed them. He added that there has been pressure to sell dollars in the interbank market. 

“It is expected that the market’s sentiments will move towards betterment. The sentiments are changing as the people had [earlier] thought that the dollar would reach 300,” said the ECAP’s secretary general. 

He urged the people to sell their dollars for profit-taking. “This would bring stability to our country, our foreign exchange reserves will increase, the rating will improve, the rate of our sukuk bonds will also get better and it will provide ease to the government in holding negotiations with the IMF.”  

Paracha added that the staff-level agreement with the Fund will be signed on February 9. “However, the IMF’s conditions will raise inflation and for that, the government needs to manage its expenses.”

He warned that if the people have to bear the brunt of the taxes, then this could lead to an anarchic situation in the country. He said that the government needs to take steps carefully as the political situation is also unstable. 

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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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