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The Dollar today gained about 6.45 rupees in the interbank market as interim government let the rupee slide deeper into the abyss. The State Bank of Pakistan (SBP) supported another bout of depreciation after it raised the interest rate by 100 bps on Saturday.
State Bank in the monetary policy statement signalled externals risks as the driving force behind the Monetary Policy decisions; rising estimates for fiscal deficit from 6.8 percent to 5.5 percent, current account deficit for 11 months reaching $16 billion, imports pressurizing forex reserves and the changing inflationary landscape in the wake of rising global oil prices.
Pakistani Rupee is currently the worst performing currency in the world second only to Turkish Lira. The South Asian economies have all depreciated against the USD during the last six months as confidence in developing and emerging markets continues to wane. Turkish Lira -26.41 percent, Indonesian Rupee -6.93 percent, Indian Rupee -6.12 percent have all fallen against the greenback during the last six months. Pakistani Rupee (PKR) during the last six months has fallen more than 15.26 percent, not accounting for today’s devaluation, becoming the second worst performing currency in the world.
Lack of foreign investment, import heavy trade numbers, rising WPI, CPI and core inflation and forex reserves at three year lows have all pushed interim Finance Minister to take bold and concrete steps during her short but crucial tenure. She recently suggested an IMF (International Monetary Fund) bailout might be the only way out for the upcoming government, and according to media reports she has already initiated proceedings for a bailout from IMF and the recent bouts in depreciation may be the prerequisite steps currently being taken by the Ministry of Finance to take the process ahead.
Dollar in the open market rose by Rs. 4.65 against the Rupee reaching 128.75. The Dollar since December, 2017 has increased by 21 percent. In total, the resulting increase in debt volume due to the last four depreciations has crossed the Rs. 2,000 billion mark.
Analysts hold the opinion that today’s exchange movement will have its due impact on the economy especially on the 100 index whereby it will influence sectors such as textile, E&P, IPPs, chemicals and IT sectors positively. Autos and Cement are likely to be affected negatively whereas refineries, OMC, and Fertilizer are expected to remain neutral.
Today’s movement in the rate came right at the open in the morning sending shockwaves to the 100 index as well which after closing the last week in the green, has lost more than 600 points during the day, touching an intraday low of 39396 points and breaking the 40,000 psychological level yet again. Cement, Commercial Banks, and Fertilizer scripts were worst affected today as they cumulatively took away more than 310 points from the 100 index.
Analysts believe that today’s exchange rate movement – fourth in the last eight months by the SBP – was primarily due to the widening current account deficit and the declining forex reserves.
The street expects the rupee slide to continue even further. Analysts estimate, the rupee would further be devalued to 130 PKR/USD by the end of this year in order to appease the IMF authorities.
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Weakened rupee to unleash a new wave of inflation: RCCI Chief
The Rawalpindi Chamber of Commerce and Industry (RCCI) has expressed serious concerns over the sharp fall in the value of Pakistani rupee against the US dollar.
Talking to a trade delegation at chamber house RCCI President Zahid Latif Khan said, it would unleash a new wave of inflation in the country and create additional problems for the business and industrial activities.
He said that the fall of rupee from Rs122 per dollar to Rs128 in single day should be cause of great concern for policy makers and monitoring bodies adding that rupee was devalued by about five per cent in December last year in a similar manner and another devaluation of over 5 per cent in a single day would create new challenges for the country's economy.
This would be the fourth round of devaluation since December 2017 when the currency was hovering around Rs 105 to the US dollar, he added.
He said instead of withdrawing support for the rupee in the daily market, State Bank of Pakistan (SBP) should make efforts for a stable currency as currency volatility is disturbing the long-term business planning efforts of the private sector.
Zahid Latif Khan said falling value of rupee would increase the debt burden on the country as a Rs1 devaluation causes a Rs 60 billion jump in the public debt burden. He stressed that government should take urgent measures to end volatility and bring stability in the local currency.
“A weaker rupee would increase the cost of doing business, especially for companies that are import-dependent”, he said.
RCCI Chief cautioned that It must be kept in mind that the rising dollar would lead to costlier imports and the exporters will also bear the brunt due to rise in cost of imported raw materials, plunging the economy into further deep crisis.
(APP)
Chinese outbound FDI favours Europe over North America
Chinese outbound foreign direct investment (OFDI) has veered towards Europe over North America in the first six months of the year, a report showed on Monday.
The value of newly announced Chinese mergers and acquisitions in Europe reached 22 billion US dollars, far exceeding the 2.5 billion US dollars of M&A in North America, according to research from global law firm Baker McKenzie and independent research provider Rhodium Group.
The value of completed Chinese investments was five times higher in Europe than in North America, the report showed.
"Regulatory hurdles remain lower, political relations are more predictable and Europe offers a great base for industrial high-tech assets, which is a good match with Chinese regulators' outbound investment priorities," said Thilo Hanemann, director of Rhodium Group's cross-border investment practice.
(APP)
SBP imposes margin restrictions on Import of 131 Items
The state bank of Pakistan announced that it will require banks to, with immediate effect, obtain 100 percent cash margin on the import of 131 items.
PKR becomes second worst performing currency in the world after Turkish Lira
The Dollar today gained about 6.45 rupees in the interbank market as interim government let the rupee slide deeper into the abyss. The State Bank of Pakistan (SBP) supported another bout of depreciation after it raised the interest rate by 100 bps on Saturday.
State Bank in the monetary policy statement signalled externals risks as the driving force behind the Monetary Policy decisions; rising estimates for fiscal deficit from 6.8 percent to 5.5 percent, current account deficit for 11 months reaching $16 billion, imports pressurizing forex reserves and the changing inflationary landscape in the wake of rising global oil prices.
Pakistani Rupee is currently the worst performing currency in the world second only to Turkish Lira. The South Asian economies have all depreciated against the USD during the last six months as confidence in developing and emerging markets continues to wane. Turkish Lira -26.41 percent, Indonesian Rupee -6.93 percent, Indian Rupee -6.12 percent have all fallen against the greenback during the last six months. Pakistani Rupee (PKR) during the last six months has fallen more than 15.26 percent, not accounting for today’s devaluation, becoming the second worst performing currency in the world.
Lack of foreign investment, import heavy trade numbers, rising WPI, CPI and core inflation and forex reserves at three year lows have all pushed interim Finance Minister to take bold and concrete steps during her short but crucial tenure. She recently suggested an IMF (International Monetary Fund) bailout might be the only way out for the upcoming government, and according to media reports she has already initiated proceedings for a bailout from IMF and the recent bouts in depreciation may be the prerequisite steps currently being taken by the Ministry of Finance to take the process ahead.
Dollar in the open market rose by Rs. 4.65 against the Rupee reaching 128.75. The Dollar since December, 2017 has increased by 21 percent. In total, the resulting increase in debt volume due to the last four depreciations has crossed the Rs. 2,000 billion mark.
Analysts hold the opinion that today’s exchange movement will have its due impact on the economy especially on the 100 index whereby it will influence sectors such as textile, E&P, IPPs, chemicals and IT sectors positively. Autos and Cement are likely to be affected negatively whereas refineries, OMC, and Fertilizer are expected to remain neutral.
Today’s movement in the rate came right at the open in the morning sending shockwaves to the 100 index as well which after closing the last week in the green, has lost more than 600 points during the day, touching an intraday low of 39396 points and breaking the 40,000 psychological level yet again. Cement, Commercial Banks, and Fertilizer scripts were worst affected today as they cumulatively took away more than 310 points from the 100 index.
Analysts believe that today’s exchange rate movement – fourth in the last eight months by the SBP – was primarily due to the widening current account deficit and the declining forex reserves.
The street expects the rupee slide to continue even further. Analysts estimate, the rupee would further be devalued to 130 PKR/USD by the end of this year in order to appease the IMF authorities.
Movement in the exchange rates reflects the demand supply gap of the foreign exchange in the interbank market: SBP
Today, the PKR-US$ exchange rate in the interbank market closed at PKR 128.0 per US$ against the closing level of PKR 121.55 per US$ of the previous day. This movement in the exchange rates reflects the demand-supply gap of the foreign exchange in the interbank market.
As noted in the recent monetary policy statement, FY18 ended with a real GDP growth at a thirteenyear high level. However, this high growth has been accompanied with a notable deterioration in the country’s balance of payments. Despite a double-digit growth in exports (YoY 13.2 percent in Jul-May FY18) and a moderate increase in remittances, strong demand for imports (YoY growth of 16.4 percent in Jul-May FY18) have pushed the country’s current account deficit to the levels not sustainable beyond the short run.
SBP is of the view that this adjustment in the exchange rate along with the increased policy rate and other administrative measures, would help contain domestic demand in general, and reduce the imbalances in the country’s external accounts in particular.
SBP will continue to closely monitor the evolving fundamentals of the economy, and stand ready to ensure stability in the financial markets.
Rupee devaluation weighs in on the 100 index
As a collective result of increased interest rates coming into effect today onwards, and the devaluation of Pakistani rupee against the dollar, the market remained bearish today. KSE – 100 Index dropped steadily to settle at 39,665 points after losing 605 points, by the session end. The index peaked at 40,464 points whereas the low for the day was recorded at 39,396 points, swinging within a range of 1,068 points.
93.1 million Shares were traded at KSE – 100 today, increasing by 7.1% from the previous session’s end. The total value of trade extended to PKR 5 billion.
Chemical remained the top performer today, by contributing 9.25 points to the index while Cement, Commercial Banks, Fertilizers and Oil & Gas Marketing Companies were the net losers in this session, collectively taking away 381.35 from KSE – 100 index.
14 companies ended the day in green while 77 closed in the red.
KSE All Share index fell by 444 points, landing at 28,920 points, touching a high of 29,485 points and a low of 28,775 points. The total volume traded today was 147.3 million shares at a value of PKR 6 billion.
Maintaining its position since the last two sessions, Commercial Banks again led the sector turnover today, after trading a volume of 49.9 million shares. The Cement Sector secured the second position turnover wise by trading 20.2 million shares.
Within KSE All Share Index, 79 companies ended the day positively while 205 companies were negative by the day end.
|
Net Gainers |
||
|
Symbol |
Companies |
Net Change |
|
COLG |
Colgate-Palmolive Pakistan |
139.22 |
|
ILTM |
Island Textile Mills Limited |
34.25 |
|
IDYM |
Indus Dyeing Manufacturing Company Limited |
24.00 |
|
SAZEW |
Sazgar Engineering Works Limited |
17.38 |
|
MARI |
Mari Petroleum Company Limited |
16.47 |
|
Net Losers |
||
|
Symbol |
Companies |
Net change |
|
PMPK |
Phillip Morris Pakistan Limited |
-144.49 |
|
PAKT |
Pakistan Tobacco Company Limited |
-107.50 |
|
SAPL |
Sanofi-Aventis Pakistan Limited |
-46.97 |
|
JLICL |
Jubilee Life Insurance Company Limited |
-31.95 |
|
INDU |
Indus Motor Company Limited |
-31.79 |
|
Volume Leaders |
||
|
Symbol |
Companies |
Volume |
|
BOP |
Bank of Punjab |
25,158,500 |
|
FCCL |
Fauji Cement Company Limited |
10,467,000 |
|
BIPL |
Bank Islami Pakistan Limited |
9,105,500 |
|
EPCL |
Engro Polymer and Chemicals Limited |
5,931,500 |
|
KEL |
K-Electric Limited |
5,664,500 |
NEPRA approves power plant to generate 40 MW electricity from solid waste in Lahore
A power plant to generate forty megawatts of electricity from solid waste will be set up in Lahore.
To this effect, National Electric Power Regulatory Authority today approved the grant of generation license to Lahore Xingzhong Renewable Energy Company (Private) Limited.
The project will deploy state of the art incineration type generation facility and the most suitable waste to energy technology.
Successful implementation of the project will solve waste disposal problems and challenges of limited space for landfills and gas emissions resulting in cleaner cities and healthy life.
BoK announces profit rates on various accounts
The Bank of Khyber (BoK) Monday announced profit rates on PLS, Special Deposit accounts and PLS Term Deposits on closure of first six months of fiscal year 2018.
A press release issued here said that from January 1st 2018 to June 30, 2018 the bank announced 3.75 percent, 4 percent and 4.50 percent profit rates for P
LS, Special deposits and PLS term deposit accounts respectively.
It advised clients to visit the bank’s website www.bok.com.pk/content/profit-rates for profit rates.
(APP)
Stock markets, dollar diverge with eyes on Trump
Stock markets diverged on Monday, with traders reacting to weaker Chinese economic data and upbeat earnings at Deutsche Bank.
The dollar was up versus the yen but down against the euro and pound, with eyes on US President Donald Trump's summit with Russian counterpart Vladimir Putin.
Oil prices slid more than one dollar.
"It's been a slow start to the trading week in Europe after a rather mixed Asia session saw Chinese" growth slow, noted Michael Hewson, chief market analyst at CMC Markets UK.
"US markets look set to open slightly higher ahead of some key economic and earnings announcements later today," he added.
After a positive end to last week's roller-coaster ride for equities, investors shifted back into defensive mode, with concerns about the impact of tit-for-tat tariffs on the world's top two economies, China and the United States.
Beijing said Chinese economic growth in April-June came in at 6.7 percent, in line with forecasts in an AFP survey and better than the government's annual target -- but a shade down from the previous three months.
While the reading refers to the three months before US levies on billions of dollars of Chinese goods were imposed, observers had already said the country was likely to struggle with a trade face-off as leaders battle a debt mountain and pollution.
News Friday that China's trade surplus with the United States, a major cause of Trump's anger, hit a record in June has further fuelled tensions.
Mao Shengyong, a spokesman for the national statistics bureau, warned that the trade row "will have an impact on the economies of both China and the United States, and now that the world economy is deeply integrated, and the industrial chain is globalised, many related countries will also be affected".
Shanghai's main stocks index closed down 0.6 percent on Monday and Sydney eased 0.4 percent -- but Hong Kong ended slightly up after a late rally.
Singapore, Seoul, Wellington and Taipei were lower while Tokyo was closed for a public holiday.
In Europe, London and Paris dropped while Frankfurt rose.
Shares in Deutsche Bank jumped 6.9 percent to 10.27 euros after Germany's biggest lender far outstripped analysts' estimates of its earnings in the second quarter.
Deutsche is looking to project a refreshed, confident image to investors under new chief executive Christian Sewing, who replaced crisis firefighter John Cryan as head of the bank in April.
On currency markets meanwhile, the pound held its own against the dollar after fluctuating on Friday in reaction to an interview in which Trump hit out at Prime Minister Theresa May's handling of Brexit and appeared to dampen hopes of a future UK-US trade deal.
Key figures at 1030 GMT
London - FTSE 100: DOWN 0.7 percent at 7,612.10 points
Frankfurt - DAX 30: UP 0.1 percent at 12,557.27
Paris - CAC 40: DOWN 0.2 percent at 5,419.77
EURO STOXX 50: FLAT at 3,453.15
Hong Kong - Hang Seng: UP 0.1 percent at 28,539.66 (close)
Shanghai - Composite: DOWN 0.6 percent at 2,814.04 (close)
Tokyo - Nikkei 225: Closed for a public holiday
New York - Dow: UP 0.4 percent at 25,019.41 (close)
Dollar/yen: UP at 112.38 yen from 112.35 yen at 2100 GMT Friday
Euro/dollar: UP at $1.1706 from $1.1686
Pound/dollar: UP at $1.3262 from $1.3236
Oil - Brent Crude: DOWN $1.46 at $73.87 per barrel
Oil - West Texas Intermediate: DOWN $1.11 at $69.90
burs-bcp/rl
(APP)
FBR obtains information about Pakistanis’ properties in UK
The Federal Board of Revenue (FBR) has obtained information regarding immovable properties owned by Pakistanis in United Kingdom (UK).
The information has been obtained with the assistance of Organization for Economic Cooperation and Development (OECD) and UK tax authorities, said FBR in a brief statement.
According to the statement, the information was being analyzed by the board for taking further action, it added.
Pakistan had signed the OECD Convention on Mutual Administrative Assistance in Tax Matters in September 2016, and Multilateral Convention to Implement Tax Treaty Related Measures to Prevent Base Erosion and Profit Sharing (BEPS) as well as Multilateral Competent Authority Agreement on Automatic Exchange of Financial Accounts (MCAA) in June 2017.
Becoming signatory of the OECD convention facilitates international cooperation on national tax laws and provides administrative cooperation among member countries to combat tax evasion.
The government had recently announced amnesty schemes including Voluntary Declaration of Domestic Assets Act, 2018 and Foreign Assets (Declaration and Repatriation) Act, 2018 which received unprecedented response.
Over 55,225 declarations have been filed with declared value of foreign assets around Rs577 billion and that of domestic assets around Rs1192 billion.
The declarants paid around Rs97 billion taxes including Rs36 billion on foreign assets and Rs61 billion on domestic assets, whereas $40 million were repatriated.
The original closing date for filing declarations under the amnesty scheme was June 30th, 2018, which had been extended till July 31st, 2018.
(APP)
