Blaze News - Pakistan

The inflow of workers’ remittances rose 18% in February 2024 compared to the same month of last year, reaching $2.25 billion ahead of the fasting month of Ramazan that is beginning next week. According to State Bank of Pakistan’s (SBP) data, the remittances had stood at $1.90 billion in February last year. The higher inflows should help finance the trade deficit and keep the current account balance at breakeven level. They may also support the Pakistani rupee in standing at stronger levels compared to the US dollar and currencies of other trading partners. Non-resident Pakistanis send more funds to their family members and friends back home ahead of and during Ramazan and Eid festival to help them cope with high inflation and meet relatively higher expenditures. On a month-on-month basis, however, the remittances fell 6% to $2.25 billion in February compared to $2.39 billion in the prior month. Topline Securities Deputy Head of Equity Sales Ali Najib linked the drop in remittances with...

The demand for petroleum oil products has hit a five-month low at 1.12 million tonnes in February due to increased prices, sluggish industrial activities, the transition of agriculture tube wells from diesel to solar power, and the introduction of new local coal-based and nuclear power plants replacing furnace oil-run generation plants. According to oil sales data compiled and reported by Arif Habib Limited, overall demand decreased by 8% to 1.12 million tonnes in February compared to the same month last year. Additionally, demand dropped by 19% compared to January 2024. In the first eight months (Jul-Feb) of the current fiscal year 2023-24, the demand for oil products decreased by 13% to 10.18 million tonnes compared to 11.69 million tonnes in the same period last year. Speaking to The Express Tribune, Mohammad Awais Ashraf, Director of Akseer Research, highlighted that the upward trend in petroleum oil prices has squeezed people’s purchasing power, leading them to reduce their relian...

Pakistan’s US dollar-denominated Eurobonds and Sukuks have emerged as some of the world’s best-performing bonds in global markets, driven by optimism surrounding the nation’s domestic macroeconomics amidst the ongoing elections to elect new political governments at the centre and in the provinces on Thursday. The robust rally in these bonds indicates a restoration of foreign investors’ confidence in Pakistan and its future government, which is widely anticipated to unveil a new economic roadmap aimed at addressing the nation’s current economic and financing crises, particularly enhancing its capacity to make foreign debt repayments on time. Arif Habib Limited (AHL) reported that the price of Pakistan’s 10-year Eurobond, valued at $1 billion and maturing in three months on April 15, 2024, surged to a record high of 98.11 cents on February 7, 2024. The bond, which had traded below 50 cents in June 2023, almost halving its face value of $1, has now rebounded significantly, reaching an exi...

Pakistan is on track to secure the International Monetary Fund’s (IMF) first economic review under its $3 billion loan programme in November, paving the way for the release of the second tranche of $700 million, despite some missed targets and challenges in implementing promised reforms. A recent report from Topline Research titled ‘Pakistan IMF Loan Review: Funding Requirement, Primary Deficit, Gas Pricing & Monetary Policy’ highlights that while Pakistan has faced obstacles in meeting certain benchmarks, there is a high probability that it will receive the next IMF tranche. The IMF’s Executive Board may grant a waiver if it believes the programme remains viable, and missed structural benchmarks and indicative targets are assessed in the context of overall programme performance. The State Bank of Pakistan (SBP) governor, in his post monetary policy briefing on September 14, 2023, confirmed that all quantitative performance targets required by the IMF programme related to the SBP, ...

National flag carrier Pakistan National Shipping Corporation (PNSC) has devised a strategy to expand its footprint in dry bulk cargo transportation, mostly for public sector entities, and reduce reliance on the liquid segment like petroleum products due to the changing global shipping dynamics. In its Annual Report 2023 sent to the Pakistan Stock Exchange (PSX) on Thursday, the corporation said “it seeks to reduce its dependence on the tanker segment by expanding dry bulk operations, particularly by securing long-term contracts, especially from public sector entities.” “Global oil product shipping is expected to experience double-digit growth in 2023, while tonnage demand will only increase by 4%. This trend is also influencing crude oil trade and, to a lesser extent, impacting dry bulk shipping.” The share of dry bulk cargo stood at 17% while the remaining 83% was held by liquid cargo in the previous fiscal year ending June 2023. Pakistan’s total seaborne trade volume declined to 82.9...

The US Department of Agriculture (USDA) has projected that Pakistan’s rice exports will jump by over 40% to 4.8 million tons in the current fiscal year, signalling that exporters will fetch an additional $1 billion in overseas sales. On the other hand, the bumper wheat harvest and a turnaround in cotton output lessen the reliance on imports, reducing the need for foreign exchange significantly in fiscal year 2023-24. The agriculture sector is anticipated to play a pivotal role in reviving economic growth to the targeted 3.5% in FY24. The spike in rice exports may come on the back of access to new export markets like Russia and Mexico. Exports to Indonesia are already on the rise. India’s ban on its rice exports to stabilise prices in domestic markets will also pave the way for Pakistan to ramp up shipments to overseas markets. Pakistan has seen a turnaround in rice production, which is estimated at 9 million tons in FY24 compared to a poor harvest of 5.5 million tons in the previous fi...

Pakistan’s central bank has deployed the person-to-merchant (P2M) online payment option on its instant payment system, Raast, which is a step forward towards reducing the use of cash, documenting and digitalising the economy. The State Bank of Pakistan (SBP) is expected to formally launch the new payment option in the next couple of weeks. Six entities including five banks have already become part of the new journey. P2M enables people to pay directly to merchants for shopping, dining and pay monthly utility bills through the QR code. Speaking at the 21st Conference on “Future Banking Summit 2023” on Tuesday, SBP Director at Payment Systems Policy and Oversight Department Qazi Shoaib Ahmad said “P2M has also been deployed on September 3, 2023.” Raast is an initiative of the SBP that enables instant end-to-end digital payments among individuals, businesses and government entities. “P2M will be a game changer in terms of adoption of Raast at the industry level,” he said, adding that the ...

The inflow of workers’ remittances sent home by overseas Pakistanis through official channels remained low at $2.09 billion in August 2023, adding to pressure on the country’s capacity to pay for imports and repay the maturing foreign debt. According to the State Bank of Pakistan (SBP)’s data released on Monday, the remittances from expatriate Pakistanis dropped by almost 24% to $2.09 billion compared to inflows of $2.74 billion in August 2022. The apparent strengthening of the illicit Hawala and Hundi network restricted remittances through official channels as many non-resident Pakistanis opted for grey markets, which were offering a Rs20-25 higher price for each dollar compared to the price quoted by official channels including commercial banks and authorised foreign exchange companies. Overall, in the first two months (July-August) of current fiscal year 2023-24, the remittances slumped 22% to $4.12 billion compared to the receipt of $5.26 billion in the same period of previous fisc...

Commercial banks jacked up the cost of lending to a new record high at 24.62% on Thursday, which strongly indicated that the central bank was considering increasing its benchmark policy rate to a new all-time high next week. The surge in the lending rate has badly impacted the government – the largest borrower from commercial banks over the past four years. Besides, the high cost will continue to discourage the private sector to borrow funds for running their businesses, prolonging economic depression in the country. Market talk suggests the SBP may increase the policy rate by 1.5 percentage points to 23.5% on September 14. The bank may do so to control the high inflation, which stood at an average of 27.8% in Jul-Aug mainly due to increase in power and petroleum product prices. The central bank reported that commercial banks increased their benchmark six-month Karachi Inter-bank Offered Rate (Kibor) by 1.02 percentage points to 24.62% on Thursday compared to 23.60% on Wednesday. Also ...

The absence of US dollar inflows has kept on hitting Pakistani currency hard, sending it to a new historic low above Rs307 to the greenback in the inter-bank market on Tuesday. According to the State Bank of Pakistan (SBP), the rupee dropped 0.48%, or Rs1.46, to the all-time low at Rs307.10 against the dollar. In the open market, however, the currency recovered 1.55%, or Rs5, to Rs323/$ in the wake of a crackdown on currency smugglers in areas bordering Afghanistan, according to the Exchange Companies Association of Pakistan (ECAP). The partial recovery in the retail market encouraged the gold pricing committee to revise the precious metal’s price down by 2.63%, or Rs6,300, to Rs232,800 per tola (11.66 grams). In comments to The Express Tribune, Topline Securities CEO Muhammad Sohail said “Pakistani rupee is falling (in the inter-bank market) in the absence of immediate dollar inflows.” It was happening at a crucial time when “the government has to meet the IMF’s September-end conditio...

Despite the country securing external loan payback arrangements under the International Monetary Fund (IMF) loan program, the majority of businesses remain wary of the risks associated with defaulting on foreign debt repayments, according to a survey conducted by Gallup Pakistan. The businesses have little hope that the current caretaker government will provide effective solutions to the problems they face, including soaring inflation, reduced energy bill subsidies, and a devalued currency. The survey included over 500 businesses, with nearly half of them reporting that they had to resort to cost-cutting measures to survive the inflationary environment that prevailed in the country during the second quarter, which ended on June 30, 2023. "The majority (72%) of businesses surveyed are concerned by Pakistan’s potential default. Of these, nearly half (49%) express significantly high concern. 17% of survey respondents are not concerned at all," according to the survey results. Re...

The weekly Sensitive Price Indicator (SPI) reading increased 25.34% in the week ended August 24, 2023 in the wake of rising food prices including wheat flour, rice, sugar and chicken, further denting the households’ purchasing power and putting pressure on their disposable income. The good news, however, was that the increase in inflation slowed down to a 63-week low in the week on a year-on-year basis, Topline Research reported. Major contributors to the rising inflation were the historic rupee devaluation, increase in petroleum product prices and an upward revision in power tariff, which may make it difficult for authorities to curb the price hike. Pakistan Bureau of Statistics (PBS) reported that the SPI for the current week ticked up 0.05% compared to the previous week. “During the week, out of 51 items, prices of 22 (43.14%) items increased, 12 (25.53%) items decreased and 17 (33.33%) items remained stable (compared to the previous week).” Pakistan’s central bank on July 31, 2023 ...

Officials of K-Electric (KE), which supplies electricity to Karachi and its adjoining areas, have given assurances to consumers that their monthly power bills will remain stable around current levels even if inflation spikes unpredictably in the coming years. The company has devised a business strategy to increase the share of low-cost renewable energy to 28%, add cheaper Thar coal-based production and cut reliance on expensive imported sources till 2030. This news may provide some relief to consumers after the previous Pakistan Democratic Movement (PDM) government jacked up base tariff up to Rs7.5 per unit for end-consumers across the country with effect from July 1, 2023. On the flip side, KE consumers will continue to bear a significant cost of theft and line losses around 15% of their bills as efforts to reduce leakages to nominal levels are believed to take years. KE officials said the company may be renamed Kinetic Energy as it was serving areas outside of Karachi as well. They r...

The Pakistan Stock Exchange (PSX) jumped up by 1,000 points to around 48,900 in the early trading hours on Friday. The market invited the outstanding renewed buying from investors after the global stock market index provider Morgan Stanley Capital International (MSCI) announced to add record 15 Pakistani listed companies into its MSCI Frontier Market Index. The development is expected to create foreign investors' interest in the domestic stock market. Later on in the day, PSX benchmark KSE 100 Index dropped to 48,410 points at around 10:50 am, reducing the substantial early morning gains to around 600 points on profit booking. Read PSX braces for downturn after budget reveal Topline Securities CEO Muhammad Sohail said in a comment "Pakistan market rallied 1,000 points in early morning trade after MSCI added record Pakistan listed companies in its indices." He wrote on social media platform X, ”record 15 listed companies being added to the main index of MSCI Frontier Marke...

The Pakistan stock market maintained a powerful rally on Thursday and crossed the threshold of 49,000 points after a gap of six years. Meanwhile, the Pakistani rupee also made a smart recovery of Rs1.55 to Rs287.83 against the US dollar in inter-bank trade before mid-day today (Thursday). At the Pakistan Stock Exchange (PSX), the benchmark Karachi Stock Exchange (KSE) 100 Index increased by over one percent, or over 600 points, to 49,403 points before mid-day. Speaking to The Express Tribune, Pak-Kuwait Investment Company Head of Research Samiullah Tariq said, "reasons for the increase in PSX are improvement in the balance of payment (BOP) outlook after the International Monetary Fund's (IMF) latest loan programme of $3 billion, very attractive valuations of stocks in term of price-to-earning-ratio (PE), and buy-back of their own companies' shares by the companies' owners these days". Moreover, he added, the rupee-dollar exchange rate is moving with demand and sup...

The Pakistan stock market soared by over 2%, or over 1,000 points, to a two-year high at 48,000 points in early trading on Monday. Pakistan Stock Exchange (PSX) has maintained the powerful rally over "optimism of investment from Saudi Arabia and UAE along with the Pakistan Mineral Summit helping investors confidence," Topline Securities CEO Muhammad Sohail said in a comment to The Express Tribune. Saudi Arabia has held talks with Barrick Gold to invest in Pakistan's multi-billion dollar copper mining reserves. The investment can help the country earn much-needed US dollars, building foreign exchange reserves. Besides, the Chinese vice prime minister has arrived in Islamabad on a two-day visit to mark CPEC's 10-year anniversary. This is another positive development for Pakistan with a lot of good and bad happening at the global level. Read Why stagflation vexes the economy The strong rally at the PSX has also been attributed to the expected announcement of a new benchm...

The Pakistani currency improved by Rs2.14 to Rs275.34 against the US dollar in the interbank market on Thursday morning after the IMF executive board gave final approval for the $3 billion loan program for Pakistan. Market reports suggest that the currency had briefly gained Rs5.47 and recovered to Rs272 against the greenback in the early hours of trading today, but failed to sustain the significant surge. This is the third conservative working day that the rupee has maintained an uptrend amid positive developments, rising cumulatively by around Rs4 to Rs275/$ at present. The IMF executive board approved the immediate release of the first tranche of S1.2 billion to Pakistan. The UAE also deposited a fresh $1 billion in the State Bank of Pakistan (SBP) on Wednesday to support the nation during these trying times. Saudi Arabia lent $2 billion on Tuesday. Read Can IMF deal end our balance of payments crisis? The new capital inflows from the friendly countries have cumulative...

In line with expectations, the new IMF programme strongly defended the Pakistani currency and allowed a significant fightback against the US dollar after it surged by 3.62,%, or Rs10, to Rs276 against the US dollar in the interbank market Tuesday morning. In the open market, the currency also jumped by Rs10 to reach Rs280 against the greenback this morning. This is significantly lower compared to Finance Minister Ishaq Dar's claim of Rs270-272 against the dollar in the open market on Monday. Currency dealers said the retail market had largely remained closed the previous day. Pakistan signed a staff-level agreement (SLA) with IMF for a new nine-month loan programme of $3 billion on Friday. Tuesday was the first trading session in the interbank market after one week of Eid holidays, weekly and annual offs. It was the first session of the new fiscal year 2024 as well. Pakistan achieved the IMF lifeline over the holidays. Read: IMF deal charts path to economic reco...

Pakistani currency made a remarkable recovery of almost 5.5%, or Rs16, in a single day to a one-week high at Rs295 against the US dollar in the open market at around midday on Thursday. The currency had closed at Rs311 against the greenback on Wednesday, according to the Exchange Companies Association of Pakistan (ECAP). Accordingly, the gap in the rupee-dollar exchange rate between interbank and open markets narrowed down to about Rs10 compared to around Rs27 a day ago. In the interbank market, the currency has continued to stabilise around Rs285/$ for the past couple of weeks. The widening spread in the value of the rupee between the two markets had led International Monetary Fund (IMF) to recommend the government "focus on restoration of proper foreign exchange market functioning." Read Pakistan keen to cut a ‘new’ IMF deal The significant correction in the open market became possible after the central bank allowed commercial banks to purchase US dollars from the interbank...