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PKR in free fall

December 08, 2021 (MLN): The inexorable slide has taken the Pakistani rupee (PKR) to its new all-time low against the US dollar as the currency closed the trade at PKR 177.43, depreciating by 64 paisa.

On Tuesday, the local unit lost 31 paisa to settle the trade at PKR 176.79 per USD.

The domestic unit took a continuous beating on the back of widening trade deficit and depleting foreign reserves which have amplified the demand for the dollar in the interbank market.

The rupee endured a volatile trading session with quotes being recorded in a range of 90 paisa per USD showing an intraday high bid of 177.60 and an intraday Low offer of 176.70.

As per the Exchange Companies Association of Pakistan (ECAP), PKR lost 60 paisa for buying and 70 paisa for selling over the day closed at 178.3 and 179.5 respectively in the open market.

The local unit has depreciated by 11.21% or PKR 19.88 in the fiscal year-to-date against the USD. Similarly, the rupee has weakened by 9.92% or PKR 17.59 in CY21, with the month-to-date (MTD) position showing a decline of 0.96%, as per data compiled by Mettis Global.

Meanwhile, the currency lost 6 paisa to the Pound Sterling as the day's closing quote stood at PKR 234.92 per GBP, while the previous session closed at PKR 234.87 per GBP.

Similarly, PKR's value weakened by 66 paisa against EUR which closed at PKR 200.24 at the interbank today.

On another note, within the money market, the State Bank of Pakistan (SBP) conducted an Open Market Operation in which it injected Rs.259.45 billion for 2 days at 9.15 percent.

The overnight repo rate towards close of the session was 9.25/9.50 percent, whereas the 1-week rate was 9.15/9.25 percent.

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PSX receives remaining 3.9mn shares of EClear

December 8, 2021 (MLN): Pakistan Stock Exchange (PSX) has been credited with 3,900,000 ordinary shares of Rs10 per share of EClear Services Limited (EClear) against the remaining investment of Rs39 million in EClear, said a notification issued by PSX today.

The aforesaid amount is the part of an investment worth Rs75mn in the proposed venture being sponsored by Central Depository Company of Pakistan Limited which was approved on December 23, 2020.

Later, on June 15, 2021, 3,600,000 ordinary shares of Rs10 each had been credited to the exchange upon the initial investment of Rs36mn.

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MCB appoints Shoaib Mumtaz as CEO

December 8, 2021 (MLN): The Board of Directors of the MCB Bank Limited (PSX: MCB) has approved the appointment of Mr. Shoaib Mumtaz as Acting President & Chief Executive Officer (CEO) of the bank effective from December 21, 2021, the company filing on PSX showed on Wednesday.

To note, the existing term of three years of Mr. Imran Maqbool, as President & CEO of MCB will expire on December 20, 2021.

The board has also placed on record its appreciation for the valuable contribution and the services rendered by the outgoing President & CEO, Mr. Maqbool on completion of his term on December 20, 2021, the notification added.

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European stocks steady at open after surge

December 08, 2021: Europe's top stock markets steadied at the open on Wednesday after surging the previous session on easing concerns over financial fallout from coronavirus variant Omicron, as APP reported. 

London's benchmark FTSE 100 index gained 0.2 percent to 7,350.56 points.

In the eurozone, Frankfurt's DAX index lost 0.2 percent to 15,781.87 points while the Paris CAC 40 rose 0.2 percent to 7,077.66.

Frankfurt and Paris closed up nearly three percent on Tuesday.

AFP/APP

Fitch trims global growth forecast to 5.7% amid rising...

December 8, 2021 (MLN):  Fitch Ratings, in its latest Global Economic Outlook (GEO), has lowered its global growth forecast to 5.7%, down by 0.3 ppts amid growing inflation concerns and its impact on monetary policy.

In a research note published yesterday, the rating agency has said the scale and longevity of the global inflation shock have taken most forecasters and central banks by surprise and is bringing forward the start of global monetary policy normalization.

“A strong recovery in global aggregate demand in nominal terms over the past year has not been matched by an equal recovery in output. Supply bottlenecks resulted in real GDP expanding by less than expected in 3Q21, with prices increasing by more than anticipated,” the report said.

Fitch has also cut its 2021 growth forecasts for the US, Germany and Japan, reflecting recent supply-chain-related disruptions to industrial production.

Despite the downgrade, Fitch said that 5.7% is still the fastest rate since 1973. “We are far from stagflation,” the report underlined.

The rating agency also trimmed the world growth forecast for 2022 to 4.2% from 4.4%, adding that this primarily reflects a more intense slowdown in China. Fitch expects China’s growth to fall to 4.8% in 2022 from 8.0% in 2021.

Fitch has revised US growth in 2021 to 5.7% (from 6.2% in the September GEO) and cut 2022 growth to 3.7% (from 3.9%). It also lowered the eurozone growth forecast for 2021 to 5.0% (from 5.2%), but the forecast for 2022 is unchanged at 4.5%.

Growth in emerging markets excluding China is forecast at 5.7% in 2021 and 4.6% in 2022, both 0.1pp lower than in September, partly reflecting a sharp deterioration in Brazil’s economic outlook, Fitch said.

“There are now signs that price level shocks related to pandemic shortages are starting to morph into ongoing inflation. With monetary policy settings still super-loose, this is worrying central bankers,” said Brian Coulton, Chief Economist with Fitch.

According to the rating agency, the sharp rise in global consumer goods prices since March primarily reflects a surge in goods demand, fueled by stimulus measures, particularly in the US. Goods prices should stabilize in 2022 as spending switches back to services, strong investment boosts goods supply, and fiscal stimulus unwinds.

But there have been widespread upward revisions to inflation forecasts and the increasing prospect of inflation pressures broadening is making central banks nervous, Fitch said, adding that US core CPI inflation is expected to settle at around 3% in late 2022 and 2023, significantly higher than pre-pandemic rates.

Consequently, Fitch now expects Fed to raise interest rates in September 2022 and the Bank of England (BOE) later this month, “both far sooner than we had expected,” it added.

High inflation is raising policy tensions. The Omicron Covid-19 variant of concern represents a downside risk to growth but could adversely affect supply leading to further price increases, implying risks if central banks delay normalization, Fitch noted.

The rating agency further noted that a stronger dollar and weaker Chinese growth could weigh on commodity prices in 2022, adding to constraints on emerging-market growth, including from domestic monetary-policy tightening.

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