Business

Why is Pakistani rupee losing value against dollar?

Published

11 months ago

Farwa

With the rupee falling to new lows, stakeholders are concerned that the weakening currency could open up Pakistanis to a new round of inflationary impact, which will hit the lower and middle classes the hardest.

No sector of the economy would be immune from the fallout of the steep devaluation of the local currency — which has lost about 20% this year, among the worst performers in the world.

The rupee has gained and lost value in the past and it will do so in the future as well but this time the curve has maintained its upward trend since quite a few months now.

Economists Ankur Shukla and Abhishek Gupta, in an analysis given on Bloomberg Economics, have compiled the reason why the Pakistani rupee was so weak.

The analysts said that the capital is fleeing Pakistan because there is a growing risk that the International Monetary Fund (IMF) will not deliver a bailout, which is needed for the country to avoid default in the fiscal year starting from July. They suspected that political unrest was probably one of the reasons the Fund was baulking as the aid has been stalled since November.

They also pointed out the impact of political tumult on the rupee, stating that the country’s leadership has been unstable since Pakistan Tehreek-e-Insaf (PTI) Chairman Imran Khan was ousted as the prime minister via a no-confidence motion vote in April last year.

“Khan’s arrest this month has escalated the face-off between him and the government, as well as the army,” they noted, recalling that the rupee plunged to a record low of 299 per dollar after Khan’s jailing but recouped its losses and settled at 285 after his release.

Warnings of a massive drop in the rupee are flaring up, with some analysts forecasting another 20% decline is possible. Both economist also cautioned that the currency will likely fall further if Khan and the government continue to clash and if the IMF chooses not to provide loans.

Adil Ghaffar, chief executive officer at Premier Financial Services Pvt in Karachi also told Bloomberg that therupee may slump to as low as 350 per dollar in June if Pakistan fails to secure the loan.

“The rupee trajectory remains subject to considerable uncertainty as market sentiment is fragile,” Farooq Pasha, an economist in Karachi, said, adding that politics will remain the key risk in the near-term until the elections.

Moreover, bond investors are also growing more nervous, with the extra yield they demand to hold Pakistan’s dollar bonds over US Treasuries climbing above 35% points to a record this month.

Why is Pakistani rupee losing value against dollar?

Pakistan’s dollar bonds are trading at distressed levels, with notes due in 2031 quoted at about 34 cents on the dollar.

The country’s dollar stockpile, which stood at $4.3 billion in mid-May, is also not enough to cover even one month of imports despite heavy restrictions.

Business

There are US$13,280.5 million in foreign exchange reserves in Pakistan.

Published

8 hours ago

Farwa

According to a representative for the central bank, as of April 19, 2024, the nation’s total liquid foreign reserves were valued at US$ 13,280.5 million. A loss of US$74 million left the State Bank of Pakistan’s foreign reserves at US$7,981.2 million.

Commercial banks have $5,299.3 million in reserves for Pakistan.

In the week that concluded on April 12, the State Bank of Pakistan’s (SBP) foreign exchange reserves increased by $14.4 million to $8.055 billion.

“In a weekly statement, SBP stated that it has repaid US$ 1 billion in principal and interest on Pakistan’s International Bond, which matures this week.”

But at $13.374 billion, the nation’s total reserves decreased by $68 million. In the same way, commercial banks’ reserves dropped to $5.319 billion, a reduction of $82 million.

Business

NIMA seminar to increase Pakistan’s ship recycling industry’s capacity

Published

8 hours ago

Farwa

According to a release, important players from a range of maritime industries attended the conference to discuss issues facing the shipping sector.

It further stated that the symposium cleared the path for the resurgence of a sustainable future in ship recycling.

Participants in the conference included representatives of the Gadani Ship Breaking Labour Union, PSBA, KS&EW, KPT, PMSA, GEMS, and the federal and Balochistani governments.

Furthermore, global perspectives and ideas were offered by international specialists such as Rabia Razzaque from UN-ILO and Professor Raphael Baumler from the World Maritime University.

The seminar emphasized Pakistan’s capacity to emerge as a pioneer in the field of environmentally friendly ship recycling.

In order to protect the environment and the safety of employees, the participants emphasized the importance of following international standards and regulations.

During his speech, Chief Guest Senator Nisar Ahmed Khoro emphasized the importance of the maritime industry’s resurgence and the crucial necessity for coordinated efforts from all parties involved.

A new age of economic prosperity, worker safety, and environmental responsibility for Pakistan’s maritime industry was called for as he urged the stakeholders to work together on a comprehensive SENSREC program.

Vice Admiral Ahmed Saeed (Retd), the president of NIMA, emphasized the significance of environmental stewardship and safety in ship recycling procedures.

Business

Inflows into the Roshan Digital Account surged to $7.660 billion on March 24.

Published

8 hours ago

Farwa

According to the data, remittance inflows for the month of March totaled US$ 182 million, whereas they were US$ 141 million in February and US$ 142 million in January 2024.

Millions of Non-Resident Pakistanis (NRPs), including those who own Non-Resident Pakistan Origin Cards (POCs), can now engage in banking, payment, and investing activities in Pakistan with the help of these accounts, which offer cutting-edge banking solutions.

According to a statement from the State Bank of Pakistan, the number of accounts registered under the program increased by 11,091 from 668,701 accounts in February 2024 to 679,792 accounts in March 2024.

As of March 2024, the central bank reported that foreign nationals of Pakistan have invested US $312 million in Naya Pakistan Certificates, US $528 million in Naya Pakistan Islamic Certificates, and US $31 million in Roshan Equity Investment.

It is important to note that former prime minister Imran Khan introduced the Roshan Digital Account initiative in September 2020 with the goal of giving Pakistanis living abroad access to digital banking services for the first time.