May 16, 2022 (MLN): Responding to the worst economic scenario along with political noise, the Pakistani rupee (PKR) crashed by 1.7 rupees against the US dollar as the currency settled today’s trade at 194.18, compared to the previous close of 192.53 per USD.
Throughout the day, the rupee endured a highly volatile trading session with quotes being recorded in a range of 2.2 rupees per USD showing an intraday high bid of 194.20 and an intraday low offer of 192.30.
The country is going through the extremely worst economic crisis and cherry on the top, the melting reserves with no clue of IMF tranche and funding from friend countries have created a strong spell of uncertainty.
Speaking to Mettis Global, Zafar Paracha, President of Exchange Companies Association of Pakistan (ECAP) said, given the circumstances, Pakistan is at a distance of only 35 to 40 days from Sri Lanka like-crisis.
On the other hand, Malik Bostan, President of Forex Association of Pakistan is hopeful that the dollar will soon reach between 180 to 182 in open market if timely measures will be taken.
Adding to it, he said, “There is a dire need to increase the exports and exporters should immediately bring dollars to the country.”
Meanwhile, the government should also take steps to control the elements of dollar smuggling from Pakistan.
Within the open market, PKR was traded at 193.50/195 per USD.
From July’21 to date, the local unit has lost Rs36.63 against the USD. Similarly, the rupee fell by Rs17.66 in CYTD, with the month-to-date (MTD) position showing a wither of 3.37%, as per data compiled by Mettis Global.
In addition, the performance of PKR remained bleak against major currencies in the month to date as it weakened by 4.69%, 4.38%, 4.37%, 3.31%, 1.69%, and 1.68%, against JPY, AED, SAR, EUR, GBP, and CNY, respectively.
During the last 52 weeks, PKR lost 21.42% against the greenback, reached its lowest at 194.18 today, and touched its high of 152.59 on May 17, 2021.
Furthermore, the local unit has weakened by 8.47% since its high on May 17, 2021, against EUR. While, it has dropped by 9.39% against GBP since its high on May 17, 2021.
Meanwhile, the currency lost 2.1 rupees to the Pound Sterling as the day's closing quote stood at PKR 237.48 per GBP, while the previous session closed at PKR 235.34 per GBP.
Similarly, PKR's value weakened by 2 rupees against EUR which closed at PKR 202.45 at the interbank today.
The overnight repo rate towards the close of the session was 12.00/12.20 percent, whereas the 1-week rate was 12.45/12.55 percent.
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May 16, 2022: Wheat prices surged to a new record high on Monday after India decided to ban exports of the commodity as a heatwave hit production.
The price jumped to 435 euros ($453) per tonne as the European market opened.
Global wheat prices have soared on supply fears since Russia's February invasion of agricultural powerhouse Ukraine, which previously accounted for 12 percent of global exports.
The spike, exacerbated by fertiliser shortages and poor harvests, has fuelled inflation globally and raised fears of famine and social unrest in poorer countries.
India, the world's second-largest wheat producer, said on Saturday that it was banning exports after its hottest March on record.
New Delhi said factors including lower production and sharply higher global prices meant it was worried about the food security of its own 1.4 billion people.
Export deals agreed before the directive issued on May 13 could still be honoured but future shipments needed government approval, it said.
However, exports could also take place if New Delhi approved requests from other governments "to meet their food security needs".
India, which possesses major buffer stocks, previously said it was ready to help fill some of the supply shortages caused by the Ukraine war.
The export ban drew sharp criticism from the Group of Seven industrialised nations, which said that such measures "would worsen the crisis" of rising commodity prices.
May 16, 2022: The European Commission on Monday sharply cut its eurozone growth forecast for 2022 to 2.7 percent, blaming skyrocketing energy prices caused by Russia's invasion of Ukraine.
The war also spurred the EU's executive to revisit its eurozone inflation prediction for 2022, with consumer prices forecast to jump by 6.1 percent year-on-year, much higher than the earlier forecast of 3.5 percent.
"There is no doubt that the EU economy is going through a challenging period due to Russia's war against Ukraine, and we have downgraded our forecast accordingly," EU executive vice president Valdis Dombrovskis said.
"The overwhelming negative factor is the surge in energy prices, driving inflation to record highs and putting a strain on European businesses and households," he added.
The EU warned that the course of the war was highly uncertain and that the risk of stagflation -- punishing inflation with little or no growth -- remained a real risk going forward.
If Russia, the EU's main energy supplier, should cut off its oil and gas supply to Europe completely, the commission warned that the forecast would worsen considerably.
"Our forecast is subjected to very high uncertainty and risks," EU commissioner Paolo Gentiloni told reporters.
"Other scenarios are possible under which growth may be lower and inflation higher than we are projecting today. In any case, our economy is still far from a normal situation," he said.
For the EU as a whole, including the eight countries that do not use the euro as their currency, the commission had also forecast growth of four percent in February, but has now cut this to 2.7 percent, the same level as for the eurozone.
The sharp reduction in expectations is in line with the forecast made in mid-April by the International Monetary Fund, which predicted 2.8 percent growth for the eurozone this year.
The EU's warning for the months ahead lands as the European Central Bank is increasingly expected to increase interest rates in July to tackle soaring inflation.
Critics warn that this could put a brake on economic activity just when the economy faced the headwinds from the war in Ukraine.
May 16, 2022 (MLN): The All-Pakistan CNG Association has announced that CNG stations will remain closed for an indefinite period.
After a hike of Rs70, the price of CNG in Pakistan has reached a new high of Rs300 per kilogram which is difficult for association to sell at this price.
In a statement, CNG Dealers Association Chairman Abdul Sami Khan said that the price of Re-Gasified Liquefied Natural Gas (RLNG) has also been increased without any consultation. Expressing concerns over the price hike, the chairman said that investments worth billions are being wasted in the CNG sector, as per news report.
He added that CNG was considered a cheap fuel but a massive increase would reduce its demand.
The Chairman demanded that the government should provide RLNG to the CNG sector at subsidized rates, otherwise, it should completely end the CNG sector.
The distribution losses for Sui Southern Gas Company (SSGC) have been enhanced to 18 percent. Similarly, distribution losses are 8 percent for the Sui Northern Gas Pipeline Ltd (SNGPL).
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May 16, 2022: Sri Lankan Minister of Power and Energy Kanchana Wijesekera on Monday assured the public of adequate fuel in the country soon.
In a statement on his Twitter page, Wijesekera said that with the arrival of a diesel cargo on Sunday and three fuel vessels in the near future, adequate fuel will be made available nationwide.
He also requested the public not to queue or re-fill in the next three days until the fuel station deliveries are completed.
Sri Lanka has been facing a severe fuel shortage, triggering almost daily power cuts in the past few months.