Bloodbath at Pakistan stock exchange, rupee hits another historic low

A stockbroker monitors the share prices during a trading session at the Pakistan Stock Exchange in Karachi, Pakistan, on May 16, 2022. (AFP/File)
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Updated 16 May 2022

Bloodbath at Pakistan stock exchange, rupee hits another historic low

  • Pakistan Stock Exchange shed 819 points on Monday, dropping to its lowest since December 2020
  • Experts point to lack of clarity on political front, position on IMF program and the future roadmap

KARACHI: Pakistan’s stock and currency markets witnessed another bloodbath on Monday, traders and economists said, after weeks of indecisiveness of the country’s new administration to implement prior actions demanded by the International Monetary Fund (IMF) and a lack of clarity on the future roadmap.

The benchmark KSE100 index of the Pakistan Stock Exchange (PSX) shed more than 1,000 points in the early trading before closing at 42,667 level, losing 819 points.  This brought the stock market down to its lowest since December 2020. 

However, the trading volume increased from 208.1 million shares to 250.4 million shares, while the average value rose by 27.8 percent to $45.9 million against $35.9 million.

The currency market continued to experience a declining trend as the rupee hit another all-time low against the United States (US) dollar. The greenback closed at Rs194.18 in the interbank market.

Financial experts believe the stock and currency markets suffered the losses due to the government’s inaction on the economic front, including the decision to not withdraw fuel subsidies, a prior action to resume talks with the IMF for the completion of seventh review of the $6 billion program. 

“The stocks were down due to uncertainty surrounding the IMF program as no steps were taken to adjustment oil prices and the investors expected some decisions yesterday,” said Khurram Schehzad, chief executive officer of the Alpha Beta Core financial advisory firm. 

The government “needs to move fast and take the markets and investors into confidence if there is any alternate plan, otherwise the outcomes are scary,” he said.  

Economists say the country’s economy is paying the price for the government’s indecisiveness as investors lack clarity of action. 

“The current crisis is not macroeconomics-driven, rather it stems from the government’s inaction because markets need clarity of action and a future roadmap,” Dr Sajid Amin, deputy executive director at the Sustainable Development Policy Institute (SDPI), told Arab News.   

“The government needs to swiftly declare its economic agenda, including its position on the IMF program and clearly inform about its tenure as to how long it is going to stay.” 

Pakistan and the IMF are currently negotiating the country's seventh review under the $6 billion Extended Fund Facility (EFF), which has so far disbursed $3 billion. Islamabad is expected to receive another $1 billion after the completion of the review. 

The review has been stalled since the previous government announced in February around $1.7 billion relief in energy prices, deviating from the objectives of the IMF program.   

Economists say the success of talks with the IMF would help the Pakistani currency regain some lost ground. 

“The dollar is expected to slide by Rs11-12 immediately once talks with the IMF are positively materialized,” Amin said. 

Pakistan officials and IMF representatives are expected to meet in Doha this week to draw a line of action for the completion of the South Asian country's seventh review. 

Pakistan's Finance Minister Miftah Ismail on Sunday said he was going to hold talks with the IMF, but the government did not raise the petroleum prices under its fortnightly schedule, contrary to expectations. 

“I think Pakistan is expected to talk to the IMF about keeping the fuel subsidies unchanged till June, as announced by the former government of prime minister Imran Khan,” Amin said. 

“Petrol subsidy given in March, April and May equals the BISP (Benazir Income Support Program) for the whole fiscal year 2020-21 and it could have saved Rs27 billion.”  

Analysts say the country has no other options but to avail the IMF program that is needed to stabilize the wobbling economic indicators. 


Pakistan issues fresh guidelines for Eid Al-Adha as COVID-19 cases rise

Updated 05 July 2022

Pakistan issues fresh guidelines for Eid Al-Adha as COVID-19 cases rise

  • Pakistan has had very few COVID-19 cases in recent months and did away with almost all precautions
  • In 24 hours, Pakistan recorded 653 positive cases, nearly double the number at the start of last Monday

ISLAMABAD: The National Command and Operation Center (NCOC), Pakistan’s federal pandemic response body, on Tuesday issued fresh guidelines for Eid Al-Adha, urging people to follow standard operating procedures (SOPs) as coronavirus cases rise across the country.

Pakistan has had very few COVID-19 cases in recent months and did away with almost all precautions.

But over the past 24 hours, the country recorded 653 positive cases, nearly double the number at the start of last Monday, according to NIH data. Over 162 people were reported to be in critical care.

 

“Eid UI Adha prayers should be organized in open spaces under stringent COVID protocols. In case of any compulsion to offer the prayers inside mosques, then all windows and doors should be kept open for ventilation / to minimize the chances of disease spread,” the NCOC said in a statement.

The body said up to three Eid prayers should be organized at a single venue with staggered timings to allow maximum people to offer prayers with COVID-19 protocols in place.

“All ulemas leading Eid prayers should be sensitised to keep sermons ... short so that people remain present in the prayer venues for a brief duration,” the guidelines said. “Efforts should be made to discourage sick, elderly and young children from attending Eid prayers.”

People without face masks should not be allowed to enter the prayer venue, the NCOC said, adding that prayer venues should have multiple entry and exit points and venue organizers should ensure the availability of hand sanitisers.

“It should be mandatory for all coming for prayers to use sanitisers before entering the venue,” the guidelines said.

“To ensure social distancing protocols, venue organizers to ensure prominent marking (6 feet apart) to allow sufficient space/distance between individuals. People should be encouraged to perform abulution at home before coming for the prayers and also bring their own prayer mats to the venue. Efforts should be made to sensitise people to refrain from embracing and handshaking after the prayer to avoid chances of disease transmission. There should not be any gathering at the prayer venue before the prayer and people should be asked to disperse immediately after the prayer.”

The NCOC said efforts would be made to promote and encourage central and collective sacrifices through various public, private and community organizations, while ensuring adherence to COVID-19 protocols of mask-wearing, social distancing and avoidance of crowds.
 


Pakistan approves imports in local currency from neighboring Afghanistan

Updated 05 July 2022

Pakistan approves imports in local currency from neighboring Afghanistan

  • The move is mainly aimed at buying coal to help ease energy shortages
  • Pakistan has shortage of forex reserves to buy LNG, oil in international market 

ISLAMABAD: Pakistan on Tuesday approved imports from neighboring Afghanistan in exchange for local currency, a move mainly aimed at buying coal to help ease an energy shortage.
The decision was taken in a meeting of Pakistan’s Economic Coordination Committee (ECC), a finance ministry statement said.
The ECC approved amendment in the Import Policy Order 2022 “to allow import of goods of Afghan origin against Pak Rupee” for a period of one year, it said.
The move is aimed at importing Afghan coal for Pakistan as it faces an energy crises due to a shortage of foreign reserves to buy LNG or oil in the international market to run its power plants.
Prime Minister Shehbaz Sharif announced plans last week to import coal from Afghanistan using local currency to save foreign reserves.
Islamabad has already announced an easy visa regime for Afghan nationals to help facilitate trade on both sides of the border. An Afghan finance ministry spokesman did not immediately respond to request for comment.
Customs duties from coal exported to Pakistan are a key source of revenue for cash-strapped Afghanistan. Sanctions on the banking sector and the cut in development aid since the Taliban took control last August year have severely hampered its economy.
No country has officially recognized the Taliban government, which has meant international financial assistance has dried up while Afghanistan faces a humanitarian and economic crisis.
The Afghan Taliban have lately stepped up coal exports to Pakistan to generate more revenue from its mining sector in the absence of direct foreign funding.
Kabul has raised duties on sales and increased rates recently.
Pakistan has also been facing an economic crises, with foreign reserves falling as low as hardly enough for 45 days of imports.


Media watchdog demands Pakistan ensure safety as two reporters killed in two days

Updated 05 July 2022

Media watchdog demands Pakistan ensure safety as two reporters killed in two days

  • Gunmen killed Ishtiaq Sodharo of Sindhi weekly Chinag in Khairpur district in Sindh province on July 1
  • Iftikhar Ahmed from Daily Express shot dead in northwestern Pakistani district of Charsadda the next day

ISLAMABAD: The International Federation of Journalists (IFJ) on Tuesday demanded the Pakistani government ensure the safety of journalists, days after gunmen killed two reporters within two days in two separate incidents.

Unidentified assailants killed Ishtiaq Sodharo, associated with the Sindhi weekly Chinag, in Khairpur district of the southern Sindh province on July 1. A day later, Iftikhar Ahmed, a reporter for the Daily Express, was shot dead in the northwestern Pakistani district of Charsadda. Police are investigating the motive behind Ahmed’s death, including personal enmity, while Sodharo’s wife has alleged he was killed on the orders of a local policeman. 

The IFJ condemned the murders and called on the Pakistani authorities to fulfil their international obligations under Pakistan’s constitution to safeguard press freedom.

“Pakistan’s government must take appropriate measures to ensure journalists’ safety and security, as required by law, and act to reduce assaults on journalists so that they may carry out their work without fear,” the IFJ said in a statement on its website.

Pakistan is considered a dangerous country for journalists who often have to face violence, legal cases, abductions, detentions and threats from both state and non-state actors. 

In May, the country fell 12 points on the World Press Freedom Index from 145 in 2021 to 157 in 2022.


Pakistan concludes Hajj flights, all 83,312 pilgrims arrive in Saudi Arabia

Updated 05 July 2022

Pakistan concludes Hajj flights, all 83,312 pilgrims arrive in Saudi Arabia

  • 34,453 pilgrims traveled under government scheme and over 48,000 through private operators
  • 52 flights have utilized the Route to Makkah immigration facility at Islamabad airport this year

ISLAMABAD: Pakistan’s director-general of Hajj in Jeddah said on Tuesday the country’s Hajj flight operation was complete and all 83,312 Pakistani pilgrims had arrived in Saudi Arabia. 

One of Islam’s five main pillars of faith, the Hajj was restricted over pandemic fears to only 1,000 people living in the Kingdom in 2020 and to 60,000 domestic participants last year, compared with the pre-pandemic 2.5 million pilgrims annually. 

This year, after Saudi Arabia lifted COVID-19 restrictions, the kingdom will welcome one million domestic and foreign pilgrims. A quota of 81,132 pilgrims was initially allocated for Pakistan this year, which was later increased by 2,000.

“Our Hajj flights have been completed and all 83,312 Pakistani pilgrims have arrived in Makkah,” DG Hajj, Abrar Ahmed Mirza, told Arab News over the phone from Makkah.

He said 34,453 pilgrims had traveled under the government scheme and over 48,000 through private operators.

“We are now giving them training on Hajj rituals which are starting from Wednesday especially preparing them for Mina, Arafat, and Muzdalifah where pilgrims from all over the world move at the same time,” Mirza said.

Haseeb Ahmed Siddiqui, the director of the Hajj Complex in Islamabad, said 52 flights had utilized the Route to Makkah facility at Islamabad airport this year. 

The Route to Makkah initiative allows pilgrims to fulfil all immigration requirements at the airport of origin. This saves them several hours upon reaching the kingdom since they can enter the country, having already gone through immigration at home. 

“17,077 pilgrims proceeded to the Kingdom under Route to Makkah project using 52 flights this year,” Siddiqui told Arab News.

Adeel Ahmed, a pilgrim from Rawalpindi, said he had no words to express his happiness at being selected for the pilgrimage.

“My name was not part of the first draft and I got a chance at the last moment,” Ahmed told Arab News. “I am unable to share my feelings and happiness as Allah has granted me this privilege to fulfill my dream.” 

Sumera Kiran, another pilgrim from Rawalpindi, expressed satisfaction with arrangements at the airport.

“The [Saudi] government and Pakistani authorities have done very good arrangements at the airport,” she said, adding that she had received her luggage at the hotel.


Pakistan central bank may raise rates by 125 bps to tame 13-year high inflation

Updated 05 July 2022

Pakistan central bank may raise rates by 125 bps to tame 13-year high inflation

  • The South Asian nation is wrestling with economic turmoil, a fall in reserves and a weakening currency
  • Another hike would increase government debt servicing costs as well as hurt industries, says an economist

ISLAMABAD: Pakistan’s central bank looks set to raise its key policy rate by 125 basis points at its review on Thursday, as it attempts to tackle 13-year high retail inflation, according to the median estimate in a snap poll of 10 economists and market watchers. 

The economists, analysts and senior professors surveyed were widely split on the quantum of increase by the State Bank of Pakistan (SBP), with views ranging from 50 to 200 basis points. 

Two respondents did not see a need for a rate increase. 

The central bank raised the benchmark interest rate by 150 bps in May, taking the total increase to 400 bps so far this year to counter rising inflation. 

The South Asian nation is wrestling with economic turmoil, a fall in reserves and a weakening currency. 

Data on Friday showed consumer prices in June leapt 21.3 percent from a year earlier, largely on account of a 90 percent spike in fuel prices since the end of May after the government scrapped costly fuel subsidies. 

With the current policy rate at 13.75 percent and inflation running well above, real interest rates in the economy have turned sharply negative. 

“The last monetary policy committee statement is proof that the State Bank of Pakistan is way behind the curve on anticipating inflation,” said Yousuf Nazar, an economist who writes for various publications and formerly with Citigroup. 

“Another hike would increase government debt servicing costs as well as hurt industries. 

It is not going to have much of an impact on exchange rate or overall demand,” he added. 

Most believed a hike was inevitable, given persistently high global energy prices, the abrupt ending of fuel subsidies as well as the need to control demand after SBP said in its last policy statement the economy had rebounded much more strongly than anticipated. 

“The overall policy mix is geared toward stabilization and demand management,” CEO of Macro Economic Insights Sakib Sherani said, adding that this will induce a sharp slowdown in the economy, possibly a recession, in the short run. 

But Fahad Rauf, head of research at Ismail Iqbal Securities, said he does not see the need to increase rates further. 

“The economy is already slowing down. The layoffs have started and are expected to increase further. 

Further cost pressures would only enhance the burden on industries and workers,” Rauf said. 

“The fiscal arm is working now, tough measures have been taken. SBP needs to wait for the results before further tightening,” he added. 

With Pakistan expecting a restart of the much-awaited bailout package from the International Monetary Fund after the country agreed on some tough economic policy adjustments to promote stability, the SBP’s decision is being closely watched.