Analysts call Pakistan’s currency, stocks international ‘top performers’ in August

A Pakistani currency dealer counts rupees and US dollars at a currency exchange in Karachi on December 17, 2015. (AFP/File)
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Updated 15 August 2022

Analysts call Pakistan’s currency, stocks international ‘top performers’ in August

  • Stocks surge by 22 percent while rupee appreciated by 11 percent since the beginning of this month
  • The change in market sentiment owes to expected revival of IMF program, financing from other nations

KARACHI: Local traders and analysts on Monday described Pakistan’s currency and stocks as global ‘top performers,’ saying they had recovered much of their value since the beginning of August after months of depressed trading against the backdrop of political and economic uncertainty in the country.

Pakistan’s main stock index rose by 764.25 points to close at 43,621 while the currency appreciated by 0.71 percent to close at Rs 213.98 against the US dollar in the interbank market on Monday.

The stocks and the Pakistani rupee have appreciated by 22 and 11 percent, respectively, during the ongoing month in a consistently bullish spell.

“After months of economic and political uncertainty, the rupee and stock market have emerged as top performers in August so far, beating all other countries,” Muhammad Sohail, chief executive officer of Topline Securities, a Karachi-based brokerage firm, said while referring to Bloomberg data. “The rupee is up 11 percent while KSE100 Index has surged by 22 percent in dollar terms.”

The rupee has appreciated by 11.58 percent, or Rs25.97, against the greenback in the last ten trading sessions that remained bullish.

Prior to that, Pakistan’s national currency lost its value by 17.51 percent since January due to economic concerns related to the revival of the support program of the International Monetary Fund (IMF) and the political situation that led to the ouster of former prime Minister Imran Khan in April.

The recent appreciation of the rupee is mainly due to the revival of the IMF program after Pakistani authorities and officials of the global lending agency reached a staff-level agreement for the seventh and eighth review of the loan program on July 13.

The agreement has paved the way for the disbursement of $1.2 billion by the IMF at the end of August after the approval of its executive board.

Pakistan is also expected to get some financial assistance from friendly countries, including Saudi Arabia and the United Arab Emirates (UAE), which is desperately required to bridge the financing gap recently mentioned by senior IMF officials.

These developments have also had a positive impact on the country’s equity market which had a bullish close on Monday, said analysts.

“The bullish market sentiment owes to the strengthening of the national currency along with the IMF’s letter of intent for the revival of the bailout program,” Ahsan Mehanti, chief executive officer of Arif Habib Corporation, said. “Reports of additional financial support from Saudi Arabia after the finance minister hinted at $1 billion UAE investment through Pakistan Stock Exchange [PSX] have also helped the situation.”

He added that other factors that benefitted the market included a positive sentiment in global equities and renewed foreign interest in PSX ahead of the IMF bailout receipt expected this month.

Pakistani analysts expect the rupee to stabilize between Rs200 and Rs210 against the US dollar.

“The Pakistani rupee was undervalued against the greenback which is expected to stabilize at around Rs210 after recent prospects of inflows from the IMF and friendly countries,” Samiullah Tariq, director research at the Pakistan-Kuwait Investment Company, told Arab News.

However, currency dealers said the rupee was likely to find support somewhere around Rs200 after the revival of the IMF program and expected import cuts.

“The rupee was depreciating due to the uncertainties surrounding the IMF program, though the fundamentals were sound and now the national currency is appreciating on mere promises since we have not received the funds so far,” Zafar Sultan Paracha, general secretary of the Exchange Companies Association of Pakistan (ECAP), said.

“The pressure on the Pak rupee will further ease off in the coming days due to the reduction in global commodity prices, including oil and other energy products along with freight cost cuts,” he added.

Fitch Ratings in its latest Economics Dashboard released on Monday said global supply chain disruptions were beginning to unwind as shipping rates were gradually declining while the time taken to deliver goods was also falling quickly.

It added that port congestion had eased and the backlog of orders was getting cleared, raising the prospect of lower core goods inflation ahead.

“The cost of shipping freight has declined by as much as 70 percent on some routes since September 2021 while transporting cargo now takes around 90 days instead of 122 days in April 2022,” the international rating agency said. “Congestion at US ports has dropped significantly, falling by close to 80 percent since last November.”

Pakistan government to file Supreme Court reference to revive Reko Diq gold mine project

Updated 41 min 25 sec ago

Pakistan government to file Supreme Court reference to revive Reko Diq gold mine project

  • Reko Diq project is in southwestern Pakistan hosts one of the world’s largest undeveloped copper and gold deposits
  • Project was suspended in 2011 after Pakistan denied a joint venture, Tethyan Copper Company, a licence to develop it

KARACHI: Pakistan’s federal government will file a reference in the apex court next week for the revival of Reko Diq, a gold and copper project located in Balochistan province, the attorney general said on Thursday.  

The Reko Diq project in southwestern Pakistan, which hosts one of the world’s largest undeveloped copper and gold deposits, was suspended in 2011 after Pakistan denied a joint venture, the Tethyan Copper Company, comprising Barrick Gold of Canada and Antofagasta Minerals of Chile, a licence to develop it. 

Pakistan’s Supreme Court blocked Tethyan Copper in 2013 from developing Reko Diq following a court case over how the contract had been awarded.

But Barrick Gold ended a long-running dispute with Pakistan and is set to start to develop the project under an agreement signed earlier this year.

Under the out-of-court deal, an $11 billion penalty slapped against Pakistan by a World Bank arbitration court and other liabilities will be waived and Barrick and its partners will invest $10 billion in the project, Pakistan’s then Finance Minister Shaukat Tarin had said.

On September 30, the federal cabinet approved filing a reference in the Supreme Court for the revival of the project.

“The reference will be filed after October 9 ... and all the consultations have been completed,” Attorney General Ashtar Ausaf Ali told Arab News. “This reference and the agreement [signed with Barrick Gold] will be put before the apex court with the question of whether it negates the earlier judgment of the Supreme Court of Pakistan.”  

The federal government plans to seek the court’s opinion on two questions:

“Whether the earlier judgment of the Supreme Court, the Constitution of Pakistan, laws or public policy prevent the federal and provincial governments of Balochistan from entering into the Reko Diq Agreements or affect their validity?' and 'If enacted, would the proposed Foreign Investment (Protection and Promotion) Bill, 2022 be valid and constitutional'," Pakistan's state-run media APP reported on Wednesday.

The International Centre for Settlement of Investment Disputes (ICSID) in 2019 announced a huge award of $5.8 billion against Pakistan in the Reko Diq case, filed in 2012 by Tethyan Copper. Damages included compensation of $4.087 billion by reference to the fair market value of the Reko Diq project at the time of the mining lease denial, and interest until the date of the award of $1.753 billion. The Tribunal also awarded TCC just under $62 million in costs incurred in enforcing its rights and also imposed another fine of $4 billion.

However, in March this year, the government of former Prime Minister Imran Khan signed an agreement with Barrrick Gold to avoid the $11 billion penalty.

The project will be operated by Barrick, which owns 50% stakes, while 25% shares each will be owned by the Balochistan provincial government and Pakistani state-owned enterprises. 

The first production of copper and gold is expected in 2027-2028.

Pakistan is not seeking climate ‘reparations’ after deadly floods — PM

Updated 47 min 30 sec ago

Pakistan is not seeking climate ‘reparations’ after deadly floods — PM

  • Sharif’s own climate minister Sherry Rehman has called for climate reparations from the wealthy polluting nations
  • Rich countries say purse strings tight due to soaring energy costs, fallout of Ukraine war and COVID-19 pandemic

ISLAMABAD: Prime Minister Shehbaz Sharif has said this was not the “proper” time to seek climate reparations from wealthy nations, saying that instead he wanted them to take note of their climate impacts and act before it was too late.

Sharif’s statement comes as vulnerable countries ramp up demands for rich countries to pay compensation for losses inflicted on the world’s poorest people by climate change, and after deadly floods in Pakistan have killed over 1,700 people and affected 33 million, Hundreds of thousands of displaced people who are living in the open are being exposed to diseases like malaria, diarrhea, dengue fever, severe skin and eyes infections, cholera, dog and snake bites, all of which are fast spreading amid stagnant floodwaters that officials say will take several months to recede.

Amid the disaster, many Pakistani commentators, as well as Sharif’s own climate minister, Sherry Rehman, have been calling not for aid but for climate reparations from the wealthy polluting nations.

But in an interview to the Guardian published on Thursday, Sharif pushed back on this suggestion.

“We’re not asking about reparations,” he said. “No, we’re not. I don’t think talk of reparations is proper at this point in time. What I am saying is that they should take notice of the situation, take responsibility and act speedily before it’s too late, before the damage becomes irreparable – not just for Pakistan, but for the world.”

Sharif’s statement comes despite wealthy countries failing to deliver a promise for $100 billion a year by 2020 to help poor countries lower emissions and prepare for climate change. Loss and damage payments would be in addition to that $100 billion.

Indeed, when diplomats from nearly 200 countries meet on November 7 in the beachside resort town of Sharm El Sheikh, Egypt, for the UN climate summit, this issue is likely to dominate the talks: “loss and damage,” or climate-related destruction to homes, infrastructure and livelihoods in the poorest countries that have contributed least to global warming.

The world’s 46 least developed countries, home to 14 percent of the global population, produce just 1 percent of the world’s annual CO2 emissions from burning fossil fuels, according to the UN.

As COP27 approaches, climate losses are surging — in rich and poor countries alike. In recent weeks, wildfires have swallowed huge swathes of land in Morocco, Greece and Canada, drought has ravaged Italy’s vineyards, and fatal floods hit Gambia, China and Pakistan.

But COP27 will not be easy, as rich countries arrive with purse strings tightened by soaring energy costs, the economic fallout of the Ukraine war and the COVID-19 pandemic, which prompted wealthy countries spend trillions of dollars propping up their economies.

Pakistan central bank to complete probe soon into alleged FX manipulation by banks

Updated 06 October 2022

Pakistan central bank to complete probe soon into alleged FX manipulation by banks

  • Rupee has fluctuated wildly this year, leading authorities to suspect manipulation by banks and exchange companies
  • Rupee is currently at around 223.94 to the US dollar, down around 20 percent in 2022, it had lost 27% at one stage

KARACHI: Pakistan’s central bank will soon complete an investigation into alleged manipulation by commercial banks of foreign exchange operations in the country, an official said on Wednesday.

Pakistan’s rupee has fluctuated wildly this year, particularly recently, hitting record lows against the US dollar last month before suddenly rising in recent days, leading authorities to suspect manipulation by banks and exchange companies.

“The investigations are being carried out by the regulator and results might come soon,” the chief spokesperson for the State Bank of Pakistan (SBP), Abid Qamar, told Reuters.

He said he could not give an exact date for the completion, but said the probe had started some time back during the tenure of the previous finance minister.

The rupee is currently at around 223.94 to the US dollar, down around 20 percent in 2022. It had lost 27 percent at one stage, hitting a low of 220 on Aug. 31.

A parliamentary committee on Tuesday directed the SBP to take appropriate action against all banks and exchange companies involved in volatility in the exchange rate in recent weeks.

In 16 sessions up to Sept. 22, the rupee lost close to 9 percent against the dollar. Since then, it has gained about 7 percent, without any changes in economic fundamentals.

The rupee gains coincided with the return of Ishaq Dar as finance minister for his fourth stint. Dar has strongly favored intervention in currency markets and has come down hard on exchange speculation in the past.

10 Pakistani kids all set for Street Child World Cup in Doha this month

Updated 06 October 2022

10 Pakistani kids all set for Street Child World Cup in Doha this month

  • This is the third time Pakistan is participating in the series which will take place from October 8-15
  • Pakistan reached final in 2018 but lost to Uzbekistan, latest team chosen after yearlong trail and training

ISLAMABAD: Sometimes, Sahil Khattak still can’t believe his luck.

The sixteen-year-old boy who grew up in a small village in Pakistan’s northwestern Khyber Pakhtunkhwa (KP) province, working at a shop to earn a daily wage to support his family, is headed this month to Doha as part of a team of 10 Pakistani footballers who will compete in the Street Child World Cup.

The 11-day event, which runs from October 8-15, will include 28 teams from 24 countries, and has been organized by Street Child United, a UK-based non-profit. This is the fourth edition of the tournament, with the last three held in South Africa (2010), Brazil (2014) and Russia (2018).

Pakistan reached the final in 2018 but lost the title to Uzbekistan. In 2014, it finished third place.

“I still can’t believe I have been selected,” Khattak, a goalkeeper, said in Islamabad ahead of practice with his 10-member-team, which has players from Balochistan, KP, Punjab and Gilgit-Baltistan.

The team was chosen out of up to 90 players who were trained during a yearlong trial process conducted by the charity Muslim Hands Pakistan, its program officer, Syed Muhammad Owais, said.

“The kids were trained in Mirpur, Azad Kashmir, after the initial selection, and as time passed, there was a final selection process for the top 10,” Owais added.

Muslim Hands Pakistan, which operates worldwide, conducted trials in nine academies in different parts of the country, “providing the opportunity to youth to showcase their passion on an international platform,” Owais said.

Head coach Muhammad Rasheed said the trail project had helped reach street players who did not have the means to enter academies.

“Those who do not get a chance to reach this point, we go to them and conduct trials and bring them here and groom them technically, tactically, mentally and in terms of their PR, we also do personality grooming,” the coach said.

During the trial process, the families of selected candidates were also given stipends so they would allow their children, many of whom work, to play professional football, Owais said.

About 3.3 million Pakistani children are trapped in child labor, depriving them of their childhood, their health and education, and condemning them to a life of poverty, according to UNICEF.

“Basically, I had no support from my family, they never allowed me to play,” Khattak said, smiling wryly. “Even to give the trial, I came without telling my family and took a day off from the shop [where I work], for which I was badly beaten because I didn’t get my daily wage that day.”

“Back in the day, my father was also a goalkeeper but he quit playing football due to [financial] circumstances and warned me against playing also.”

Now, however, Khattak said he was “very happy” to be part of the team and glad that eight long months of training had paid off.

Captain Muhammad Safdar said he was satisfied with the team’s performance and hopeful they could win.

“The way we have been practicing, sir [coach] has trained us day and night,” he said. “So, we are hopeful that we will win the title.”

Hopeful Europe will lift flight ban by April 2023 — Pakistan Civil Aviation Authority

Updated 06 October 2022

Hopeful Europe will lift flight ban by April 2023 — Pakistan Civil Aviation Authority

  • European Commission has invited Pakistan Civil Aviation Authority for a technical meeting on October 25 this year
  • EASA suspended PIA authorization to operate in EU member countries over licensing, flight safety concerns in 2020

KARACHI: Pakistan said on Wednesday it was hopeful its flight operations to European countries would be revived by April 2023 as the European Air Safety Agency (EASA) said it was working “constructively” with Pakistan’s civil aviation to rebuild its “confidence in the certification and oversight capabilities.”

In July 2020, the EASA had suspended Pakistan International Airlines’ (PIA) authorization to operate in EU member countries over licensing and flight safety concerns.

The licensing scandal tainted Pakistan’s aviation industry and the country grounded 262 airline pilots suspected of dodging their exams following checks of their qualifications.

Pakistan’s grounding of the pilots followed a preliminary report on a PIA crash in Karachi that killed 97 people in May 2020.

The EASA suspension was later extended indefinitely. 

In January, the EASA refused to lift the ban citing an audit by the International Civil Aviation Organization (ICAO) indicating serious degradation of the PCAA certification and oversight capabilities.

But the Pakistan Civil Aviation Authority (PCAA) says there has been an improvement in capabilities since.

“The European Commission (EC) has invited Pakistan Civil Aviation Authority for a technical meeting on October 25, 2022. We are hopeful that the matters will be resolved by April 2023,” Saifullah Khan, a PCAA spokesperson, said.

Khan said that the EC looks after mutual concerns involving the EASA, PIA and other airlines.

“The process of verification is underway and it takes [time],” he said. “In the last stage, the European Union will visit Pakistan, which is being scheduled,” he told Arab News, adding the EASA had also planned to do an online audit of the PIA in October.

The EC team intends to visit Pakistan in January-February 2023 after conducting PIA’s audit, he said.

Janet Northcote, Head of Communications EASA, said the EC and European Union Aviation Safety Agency were working with Pakistan to rebuild its confidence.

“The European Commission and the European Union Aviation Safety Agency are working constructively with the Pakistan CAA to rebuild confidence in the certification and oversight capabilities of the Pakistan authority, which is the first step required for a resumption of PIA flights to Europe,” she told Arab News via email.

Northcote said the EASA will conduct an audit of the operator. 

“EASA shall – when considering lifting a suspension of a TCO authorization – conduct an audit of the operator. When the suspension is due to major deficiencies in the oversight of the applicant by the State of the operator or the State of registry, the audit may include an assessment with the aim to verify if these oversight deficiencies have been corrected,” she added.

Northcote said since the EASA is the European Union Aviation Safety Agency— the word Union was added in 2018 and that the UK is no longer a member— hence its decision will not impact a similar ban by the UK.

“Any decisions taken by the European Commission working with EASA will not directly result in any change to the provision of flights to the UK,” she added.

A PIA official, however, said the EC’s meeting cannot be described as a milestone.

“The EC meeting is just facilitation and cannot be called a milestone,” he said. “It’s the EASA which has to take a decision and it takes its decision strictly taking progress on the safety scores for airlines into consideration,” the official told Arab News on condition of anonymity, as he was not authorized to speak on the issue. 

PCAA’s spokesperson said last year’s assessment showed the authority had fared well. 

“PCAA scored above average [in] South Asia’s score in that assessment and later significantly safety concerns were lifted,” he said.