KARACHI: Pakistan’s national currency ended the trading week on a bearish note after hitting another historic low against the United States dollar to close at Rs175.73 as the country continued negotiations with the International Monetary Fund (IMF) for the revival of a $6 billion loan program, analysts said on Saturday.
The rupee lost its value by about three percent during the week as currency traders and investors awaited the outcome of the ongoing talks between the Pakistani authorities and IMF officials which began in the first week of October.
The currency also lost its value in the open market where it closed at Rs178 for selling and Rs177 for buying on Friday against the previous closing of Rs176.50 for selling and Rs175.50 for buying against the greenback, according to the Exchange Companies Association of Pakistan.
Analysts said the uncertain outcome of talks with the IMF was keeping the Pakistani currency under pressure, though the rising demand for dollar to make import payments was also militating against the Pak rupee.
“The rupee is under pressure due to the uncertainty related to the outcome of talks with the IMF,” Samiullah Tariq, director research at the Pakistan Kuwait Investment, told Arab News. “The autonomy of the central bank seems to be the main stumbling block, impeding conclusive negotiations.”
The success of the talks is vital for the revival of the $6 billion bailout package that will make the IMF release another tranche of about $1 billion.
Tariq said the outcome of the talks would provide short-term relief to the Pakistani currency as did the Saudi pledge to offer $4.2 billion, though he added that the rising demand for greenback would remain a key challenge to the country’s monetary stability.
In the last week of October, Saudi Arabia pledged to provide $4.2 billion in assistance to Pakistan which supported the rupee and made it appreciate from Rs175.27 to Rs170 in the interbank market.
Pakistan’s growing imports are fueling the demand for the US dollar and keeping the rupee under pressure.
The country’s imports increased by 64 percent to $24.99 billion during the first four months of the current fiscal year (July-October 2021), according to the ministry of commerce which added that 40 percent of the increase came from the investment-driven capital goods imports.
Pakistani currency hits new all-time low amid prolonged IMF talks, rising import bill
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Pakistani currency hits new all-time low amid prolonged IMF talks, rising import bill
- Pakistani authorities and IMF officials have been negotiating for the revival of a $6 billion loan program
- Analysts say the outcome of IMF talks is expected to provide short term relief to the Pak rupee, adding that a surging import bill will still cause problems
Pakistan stocks close at record high over current account surplus, falling bond yields
- KSE-100 index gains 1,646.79 points or 0.97% to close at new high of 171,960.64 points
- Pakistan’s central bank posted a current account surplus of $100 million in November
KARACHI: Pakistani stocks closed at an all-time high of 171,960.4 points on Thursday, with financial analysts attributing the surge to increasing investor confidence stemming from a current account surplus reported in November and a drop in government bond yields.
The benchmark KSE-100 index gained 1,646.79 points or 0.97% to close at an all-time high of 171,960.64 points on Thursday. The previous day, Pakistani stocks surged to 170,313.85 points at close of business.
Ahsan Mehanti, chief executive officer at Arif Habib Commodities, said the optimistic mood at the stock exchange was fueled by the $100 million current account surplus reported by the central bank in November.
“Speculations ahead of year-end close and fall in government bond yields up to 70 basis points after the SBP (State Bank of Pakistan) policy easing played the catalyst role in bullish activity at PSX,” Mehanti told Arab News.
The surplus was a welcome development for Islamabad as Pakistan’s central bank reported a $291 million deficit in October.
Topline Securities, a Pakistani brokerage firm, said in its daily market review that strong buying by local funds followed a drop in Pakistan Investment Bond (PIB) yields, which boosted investor confidence.
PIB yields are the returns on bonds or government-backed securities that pay fixed semi-annual interest, with rates influenced by market demand and SBP auctions.
“Strength in ENGRO (Engro Corporation), FFC (Fauji Fertilizer Company), UBL (United Bank Limited), LUCK (Lucky Cement) and BAHL (Bank AL Habib) underpinned positive momentum, collectively contributing 1,504 points to the index,” the brokerage firm wrote on X.
“This upside was partly offset by declines in PIOC (Pakistan International Oil Company), DHPL (D.H. Corporation Limited) and MLCF (Millat Tractor Limited), which together subtracted 176 points.”
The sustained rise in equities comes amid improving liquidity conditions and continued investor participation, with market participants focusing on corporate earnings, sector-specific developments and broader macroeconomic signals.
Earlier on Monday, Pakistan’s central bank cut its key policy interest rate by 50 basis points to 10.5%, a move that surprised analysts and followed four consecutive policy meetings where rates were held unchanged.
The cut came despite an International Monetary Fund staff report earlier this month cautioning against premature monetary easing.
Inflation eased to 6.1% in November, remaining within the SBP’s target band, though analysts have warned that price pressures could resurface later in the fiscal year as base effects fade and food and transport costs remain volatile.
