Pakistan rupee gains by 0.13% after China inflows, hopes of IMF deal

A Pakistani man counts Pakistan's rupees at his shop in Karachi on May 16, 2019. (AFP/File)
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Updated 30 June 2022

Pakistan rupee gains by 0.13% after China inflows, hopes of IMF deal

  • Statistics reveal Pakistan’s national currency depreciated by 30% against US dollar in the outgoing fiscal year
  • Analysts warn against political uncertainty and its adverse impact on Pakistan’s economy and currency

KARACHI: Pakistan’s rupee continued to gain against the US dollar on Thursday, appreciating by 0.13% as the market reacted to “positive vibes” from the International Monetary Fund (IMF) and increase in forex reserves in the wake of the inflows from China, currency dealers and analysts said.

The rupee increased in value against the dollar by Rs0.27 before closing at Rs204.85 in the interbank market.

Pakistan’s national currency has taken a battering during the outgoing fiscal year 2021-22, losing its value by a whopping 30% and touching an all-time low of Rs211.93 against the US dollar on June 22, according to the central bank’s data.

Pakistan’s fast-depleting foreign exchange reserves, a huge import bill and delay in the revival of a $6 billion loan from the IMF have caused the rupee to rapidly depreciate over the past few weeks.

On Tuesday, Pakistan received a Memorandum of Economic and Financial Policies (MEFP) from the IMF for the combined 7th and 8th reviews, the development being considered an important one for the resumption of the loan facility.

“Since positive vibes are coming from the IMF front, the rupee is constantly gaining value against the dollar,” Zafar Paracha, senior currency analyst, told Arab News.

“Today, it was trading at Rs203.50 and was expected to close at Rs203,” he continued. “However, the demand pushed the value of the rupee toward the lower side by the end of the day.”

Paracha said after the recent development on the IMF front, the business sentiment had changed and a downward trend in the value of dollar had been observed in the market.

“Besides, exporters are also selling their dollars in the market while importers are holding back due to currency fluctuations,” he noted, explaining that the demand for the dollar was slow and the supply was high, which was causing the rupee to appreciate.

Pakistan’s foreign exchange reserves increased last week when China deposited RMB15 billion (roughly $2.3 billion) into Pakistan’s central bank, a few days after some Chinese banks signed a loan agreement with Pakistan.

Inflows from China and progress in Islamabad’s talks with the IMF had caused the rupee to gain strength, currency dealers said.

“The government has played a key role in its talks with the IMF and it is expected that the authorities will sign an agreement with the fund in July 2022,” Malik Bostan, president of the Forex Association of Pakistan, told Arab News, adding that inflows of $2.3 billion from China had also contributed to the appreciation of the Pakistani rupee.

Bostan said reports of former finance minister Ishaq Dar’s arrival in Pakistan next month had also changed the market sentiment and induced exporters to sell their dollars.

“Dar is known for keeping the dollar in check, so exporters have started selling their dollar holdings,” he added. “Due to this, dollar sales have increased by around 30%.”

Dealers and analysts said the country was expected to receive financial support from friendly countries such as Saudi Arabia and other donors after the completion of the IMF review.

However, they warned against political uncertainty in the country and its adverse impact on Pakistan’s economy and currency.


Investors pin hopes on ‘Daronomics' as Ishaq Dar returns to Pakistan as new finance minister

Updated 17 sec ago

Investors pin hopes on ‘Daronomics' as Ishaq Dar returns to Pakistan as new finance minister

  • Investors hopeful Dar will help stabilize rupee and tame inflation, Dar favoured strong currency in previous tenures
  • Dubbed Daronomics, Dar’s approach kept rupee stable between Rs98 and Rs105 against dollar during last stint

KARACHI: Senior leader of the ruling Pakistan Muslim League-Nawaz (PML-N) returned to Pakistan on Monday night, set to become finance minister of crisis-hit Pakistan, with investors pinning hopes that a new era of “Daronomics” would help to stabilize the rupee and tame record-high inflation.

Dar is a member of Prime Minister Shehbaz Sharif's ruling PMLN party and has already been finance minister four times. Dubbed Daronomics, his approach kept the rupee stable between Rs98 and Rs105 against the greenback during his last stint in office from 2013-2017 but he was also widely criticized for deliberately undervaluing the rupee by pumping dollars in the market.  

The Pakistani rupee gained in value by 1.11% or Rs2.63 to close at Rs237.02 against the United States dollar in the interbank market on Monday, and gained Rs6.90 to trade at Rs237.50 in the open market following the reports of Dar’s return. Dar touched down in Islamabad on Monday night and is expected to take charge this week.

While media had reported ex-finance minister Miftah Ismail would remain part of the government’s economic team, the outgoing official told Arab News on Monday: “I will have no role in the government.”

“I will try my best that I can pull Pakistan out of the economic swamp it is trapped in,” Dar told media at the airport after returning to Pakistan from London where he has lived in exile since 2017 when he was disqualified from office by a court in a corruption case.

Dar takes over as the economy faces one of its worst balance of payments crises, and recent floods are estimated to have cost it nearly $30 billion.

Earlier this month, the government cut its GDP growth forecast below 3% from a 5% budgetary target for 2022-23.

“Ishaq Dar is known for keeping the exchange rate stable for stronger currency, that is why the currency market has strongly reacted to his return resultantly the rupee gain some strength,” Samiullah Tariq, Director Research at Pakistan Kuwait Investment Company, said.

Economists said Dar’s return would bring some "comfort" to the currency market and tame increasing inflation, which is at a 47-year high at 27.3%.

“Ishaq Dar is being brought back by the coalition government keeping in view his past track of keeping the exchange rate under control,” Dr Sajid Amin, Deputy Executive Director at the Sustainable Development Policy Institute (SDPI), told Arab News.

“The first priority of the coalition government is to bring stability in the value of rupee as the national currency has fast eroded its value against the US dollar despite International Monetary Fund (IMF) program revival,” he added.

Economists said the coalition government of PM Shehbaz Sharif had paid the political cost of much-needed measures taken by the outgoing finance minister, including the withdrawal of fuel subsidies and fast depreciation of the rupee.

“When the rupee depreciates, the public attributes it to the performance of the economic managers. As a political party this has been the discourse at some level and the decision to bring Dar has been taken in order to show economic performance and improve the image in the eyes of the public.”

The government’s decision to replace Ismail with the Dar reflected the coalition government’s need to immediately “showcase” performance “due to the short time available to the election next year,” Amin said.

“Government wants to go into the election with a new image, with a new market and public feelings that it has improved things … exchange rate and inflation, two key indicators,” he added.

But many economists said Dar’s return would have little effect.

“Changing faces may have limited impacts as we are facing both global and domestic recessions,” Khurram Schehzad, CEO at Alpha Beta Core, a startup investment advisory platform, told Arab News. “Options are limited and the economic situation is challenging. So expecting something extraordinarily different from another person would not be prudent.”

Pakistani industrialists said the incoming finance minister would have to deal with a plethora of issues, chief among them political instability.

“Pakistan is facing a very difficult time at the time when Ishaq Dar is coming back … current account deficit, trade deficit, debt repayments, high inflation, and rupee dollar parity are among them,” Zubair Motiwala, chairman of the Businessmen Group at the Karachi Chamber of Commerce and Industry (KCCI), told Arab News.

“The big problem is political stability ... instability is the mother of all economic evils in Pakistan so he will have to deal with it. Our best wishes are with him and we pray for the speedy improvement of the issues the country is facing right now.”

Pakistan stocks closed bullish with the benchmark KSE100 index settling at 41,151 level, up by 531 points or 1.31%.

“Bullish activity witnessed on strong rupee recovery amid decision over the appointment of a new finance minister, which is likely to stabilise economic uncertainty,” Ahsan Mehanti, CEO of Arif Habib Corporation, said.


Rabiul Awwal moon not sighted in Pakistan, Eid Milad-un-Nabi to be celebrated on Oct. 9

Updated 26 September 2022

Rabiul Awwal moon not sighted in Pakistan, Eid Milad-un-Nabi to be celebrated on Oct. 9

  • Rabiul Awwal is the third month in the Islamic calendar
  • Prophet Muhammad (PBUH) was born in Rabiul Awwal

ISLAMABAD: The Chairman of the Ruet-e-Hilal committee, Pakistan's moon-sighting body, Maulana Syed Muhammad Abdul Khabir Azad, said on Monday the Rabiul Awwal moon had not been sighted in Pakistan on Monday.

Rabiul Awwal is the third month in the Islamic calendar. The word means "the first [month] or beginning of spring," referring to the month's position in the pre-Islamic Arabian calendar. It is in this month that Muslims celebrate Eid Milad-ul-Nabi, the birthday of Prophet Muhammad (PBUH).

"Eid Milad-ul-Nabi will be on Sunday, October 9, Chairman Rawit-ul-Hilal Committee," state media said. 

 

 

Mawlid is recognized as a national holiday in most Muslim-majority countries with the exception of Saudi Arabia and Qatar. Some non-Muslim majority countries with large Muslim populations such as India also recognize it as a public holiday.


Experts, politicians sound alarm as audio leaks put Pakistan national security, PM house ‘at stake’

Updated 26 September 2022

Experts, politicians sound alarm as audio leaks put Pakistan national security, PM house ‘at stake’

  • Experts call for strict compliance with protocols as audio recordings of conversations between key officials leaked
  • Ruling party's Talal Chaudhary called events “serious issue of national security,' saying government taking "very seriously"

ISLAMABAD: Intelligence and cyber security experts on Monday called for strict compliance with protocols as a slew of audio recordings of conversations between key government figures, including Prime Minister Shehbaz Sharif, were leaked online over the weekend.

The leaks involve discussions between Sharif and members of his cabinet, including conversations with ruling party leader Maryam Nawaz over the performance of outgoing finance minister Miftah Ismail, and with an unidentified official about the possibility of facilitating the import of Indian machinery for a power project for Nawaz’s son-in-law.

Opposition leader Chaudhry Fawad Hussain, a close aide to ex-PM Imran Khan, demanded an inquiry into the leak, saying the results should be shared with the public. Information Minister Maryam Aurangzeb said in a statement on Sunday the leaks had not revealed that the government was involved in any “illegal act.”

However, addressing a press conference in Faisalabad on Monday, ruling party leader Talal Chaudhary called the events a “serious issue of national security.”

“The audio leaks issue was taken very seriously because the national security and the sanctity of the prime minister's house are at stake,” he said.

Speaking with Arab News, intelligence and cybersecurity experts called for strict compliance with protocols and procedures.

“These data hacks occurred because advisories, recommendations, and precautions advised by the concerned institutions and departments were not followed in letter and spirit,” cybersecurity expert Tariq Malik told Arab News. “All the top officials have to cooperate with concerned departments to secure all technological devices including smartwatches and strictly follow the protocols and procedures given by the concerned authorities.”

Former additional director general Federal Investigation Agency (FIA) Ammar Jafri called the leaks a “serious threat.”

“All should take it beyond politics as it is a matter of the state of Pakistan, not any particular political party,” he told Arab News.

“The telephones of all the senior people related to these offices should be thoroughly checked by the security institutions, to find any viruses or such things. Secondly, all the officials should be strictly prohibited from downloading unnecessary applications, and thirdly the premises should be thoroughly screened and it should be done frequently.”

Bashir Wali Mohmand, a former director general at the Intelligence Bureau (IB), said the data of the prime minister’s office was top secret and taken care of accordingly by concerned departments.

“This leak is not a big thing as it has not indicated any direct threat to the prime minister's life,” he told Arab News.

Pakistan last year called on the United Nations to investigate whether India used Israeli-made Pegasus spyware to spy on public figures including then PM Imran Khan.

The Pakistani leader's phone number was on a list of what an investigation by a group of 17 international media organisations and Amnesty International said were potential surveillance targets for countries that bought the spyware.


Islamabad court extends custody of journalist Ayaz Amir, son in beating death of Canadian woman

Updated 26 September 2022

Islamabad court extends custody of journalist Ayaz Amir, son in beating death of Canadian woman

  • Sarah Inam was allegedly killed by her husband Shahnawaz Amir “with dumbbells” last week
  • Police say Inam’s family is expected to arrive in Islamabad from Canada by Tuesday to pursue case

ISLAMABAD: An Islamabad district court on Monday extended the custody of veteran journalist Ayaz Amir and his son Shahnawaz Amir in the case of the murder of the latter’s wife in Islamabad last week.

Sarah Inam, a 37-year-old economist, had wed Shahnawaz around three months ago and was allegedly murdered by her husband at the suspect’s mother’s home in Islamabad on Friday. The murder took place a day after Inam had returned from Abu Dhabi where she works.

The police arrested Shahnawaz from the crime scene on Saturday morning while his father was arrested late on Sunday night.

The police on Monday presented both suspects before judicial magistrate Amir Aziz Khan after their physical remand expired.

A deputy superintendent of police Hakim Khan said Inam’s family was expected to arrive in Islamabad from Canada tonight, Monday, to pursue the case.

“The police will record their statements, and if necessary, some more sections could be included in the already registered FIR,” he told Arab News. “The police will be fully cooperating with the victim’s family to take this case to the logical conclusion.”

During Monday’s hearing, the investigation officer in the case, Inspector Habib-ur-Rehman, requested the court to extend police custody of the suspects as officers had yet to complete their investigation.

The judge inquired about Ayaz’s role and the inspector said he had been nominated by the victim’s uncle and aunt. He said the victim’s parents lived in Canada and would reach Pakistan by tomorrow, Tuesday.

“We need to determine the role of Ayaz Amir in the nikah [marriage contract], therefore the court should grant extension in his remand,” the inspector said.

Addressing the judge, Amir said he was “traumatized.”

“I had informed the police about the incident and even guided them to the farmhouse where the murder took place,” the journalist said. “Police have not asked me anything during the remand … Have they got any new evidence against me [to seek the remand extension]?”

The journalist questioned why the police were trying to link him to the murder. “Can you [the police] furnish any evidence of my involvementt?”

The court extended Shahnawaz’s remand for three days, while Ayaz’s remand was extended for a day.

Earlier in the day, additional sessions judge Sheikh Sohail granted interim bail to Shahnawaz’s mother, Sameena Shah, for three days and directed her to be part of the investigation.

In her bail petition to the court, Shah said her son Shahnawaz had informed her about the murder on Saturday morning in a phone call. She said she had no connection with the murder and was willing to cooperate with the police in the investigation.

According to the first information report, registered on the complaint of Shahzad Town Station House Officer Nawazish Ali Khan, Shahnawaz’s mother called police on September 23 and informed them that Shahnawaz had murdered his wife “with a dumbbell.”

“My son is present in the house and has hidden the body,” the FIR quotes Sameena as saying, adding that the police subsequently raided the house.

“He had locked himself up in his room. When they broke inside, there were stains of blood stains on Shahnawaz’s hands and clothes,” the police said in the complaint. “He then confessed that he had repeatedly hit his wife with a dumbbell during an argument and then hid her body in the washroom’s bathtub.”

Shahnawaz also said he had “hidden” the murder weapon under his bed, which police subsequently found and sent for a forensics examination.


Southern Pakistani province plans to move thousands of flood-hit people to ‘tent city’

Updated 26 September 2022

Southern Pakistani province plans to move thousands of flood-hit people to ‘tent city’

  • The tent city in Karachi’s Malir district includes 1,300 tarpaulin camps to house flood-affected people currently staying at Karachi schools
  • Floods have inundated around 15,000 schools Sindh, while education activities remain suspended at another 5,000 facilities housing affectees

KARACHI: Authorities in Pakistan’s southern Sindh province on Monday said they were moving thousands of people displaced by catastrophic floods to a “tent city” on the outskirts of the port city of Karachi.

Torrential rains and floods have killed more than 1,600 people and affected 33 million across Pakistan since the beginning of monsoon season in mid-June. The deluges have forced 1.45 million people out of homes in the southern Sindh province, washing away most of their crops.

The provincial government has accommodated these displaced people in 5,000 government-run schools across the province, with 30 schools housing the affectees in Karachi.

Local authorities have decided to move these thousands of affectees from government-run schools in Karachi’s East district to hundreds of tarpaulin camps in the Malir district on the outskirts of the megapolis.

“About 7,000 people living in our relief camps would be shifted and the schools will be vacated,” said Raja Tariq Chandio, deputy commissioner of the East district, where most of the schools sheltering displaced people are situated.

Irfan Salam, deputy commissioner of the Malir district, said authorities had erected 1,300 shelters along the Malir link road, while K-Electric, the city’s sole power distributor, was also laying a power transmission line to supply electricity to these camps.

“In the tent city, flood victims will have safe drinking water and cooked meals. It has 20 washrooms and a hospital with men and women doctors and paramedics,” Salam told Arab News.

“It will take at least 10 days for K-Electric to set up the power transmission line, but we will start providing electricity through generators as we plan to move flood victims within the next two days.”

He said a charity had committed to provide breakfast, lunch and dinner for the displaced people, for which a kitchen was being set up.

The Sindh education foundation would also set up a school to impart education to children of these flood-affected people, Salam added.

The deadly floods have inundated around 15,000 schools across the southern Pakistani province, while education activities remain suspended at another 5,000 institutes housing the affected masses.

Around 2.5 million students enrolled at these 20,000 schools may drop out this year as the province lacks resources to make educational facilities functional soon after floodwater recedes from marooned areas, according to Sindh Education Minister Sardar Ali Shah.

After the relocation of affected masses to the Malir district, officials say classes will resume at 30 government-run facilities housing them in Karachi’s East district.

Javed Shah, a teacher at the Government Boys Primary School in the district, told Arab News the local administration had communicated to them that the schools would be vacated this week, but it would take another few days to make arrangements for resumption of classes.

“We are happy that classes are going to resume soon,” Shah told Arab News. “We will bring the schools to order to resume classes.”