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PKR snaps by 21 paisa

July 18, 2019 (MLN): Pakistani rupee (PKR) depreciated by 21 paisa against US Dollar (USD) in today's interbank session as the currency closed the day's trade at PKR 160.03 per USD, against yesterday's closing of PKR 159.82 per USD.

The Rupee saw moderate volatility in today’s session and traded in a range of 34 paisa per USD showing an intraday high bid of 160.15 and an intraday Low offer of 159.88.

Within the Open Market, PKR was traded at 159.5/162 per USD.

Meanwhile, the currency lost 1.5 rupees to the Pound Sterling as the day's closing quote stood at PKR 199.68 per GBP, while the previous session closed at PKR 198.14 per GBP.

Similarly, PKR's value weakened by 64 paisa against EUR which closed at PKR 179.86 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.1.08 trillion for 8 days at 13.32 percent.

The overnight repo rate towards close of the session was 13.40/13.60 percent, whereas the 1 week rate was 13.40/13.50 percent.

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Tobacco exports dip by 17% in 11 months

Jul 18, 2019: The exports of tobacco from the country witnessed decrease of 17.87 percent during the first eleven months of fiscal year (2018-19) as against the exports of the corresponding period of last year.

The Tobacco exports from the country were recorded at $20.701 million during July-May (2018-19) against the exports of $25.206 million during July-May (2017-18), showing negative growth of 17.87 percent, according to the Pakistan Bureau of Statistics (PBS).

In terms of quantity, the exports of tobacco witnessed an increase of 25.27 percent by going up from 8,824 metric tons to 2,710 metric tons, according to the data.

Meanwhile, on-year-on-year basis, the tobacco exports, however witnessed an increase of 193.91 percent during the month of May 2019 when compared to the same month of last year. The tobacco exports in May 2019 were recorded at $1.496 million against the exports of $0.509 million in May 2018.

On month-on-month basis, the export of tobacco materials also witnessed increased of 12.31 percent during May 2019, when compared to the export of $1.332million during April 2018, according to the data.

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Government to provide Rs1 billion subsidy on fertilizer imports

July 18, 2019: Adviser to the Prime Minister on Commerce, Textile, Industries and Investment, Abdul Razak Dawood on Thursday said that the government would provide Rs 1 billion subsidy on import of fertilizers to facilitate the farmers and promote agriculture sector.

 “About 100,000 tons of fertilizer would be imported to overcome the shortage in the local market besides containing its rising price,” Abdul Rzak dawood said while briefing the newsmen, adding that the government would provide Rs1 billion subsidy on these imports.

He was of the view that there were sufficient stock of Urea available in the country to cater to the demands of Khareef season, however attributed the Rs 10 price hike in the fertilizer prices due to increase in prices of inputs including gas rates.

He assured that there would not be shortage of fertilizers in the market, adding that the government had maintained fertilizer prices at Rs 1800 while its ex-factory rate would be Rs 1890 after transferring to dealers and charging of commission.

Replying to a question, he said that government would provide relief to farmers by ensuring availability of agriculture inputs including fertilizers on affordable prices in order to boost agriculture yield.

The adviser reiterated that current government was cognizant of problems being faced by the farmers adding that it would address the issues on priority.

He said that the agriculture sector was playing a significant role in promoting the economy of the country and was creating employment opportunities for more than half of the country’s population.

He urged the public and private sector to enhance mutual cooperation to resolve the issues for achieving the envisioned economic goals of incumbent government.

The Adviser informed to the media the government would soon appoint Chief Executive Officer (CEO) of the Engineering Development Board (EDB).

Meanwhile, replying to a question on Prime Minister Imran Khan’s upcoming visit to the United States (US), Razak Dawood said that he himself would accompany PM to participate in bilateral negotiations for further developing relations between the two countries.

He said that negotiations on different subjects would take place between the two countries including trade, investment and security issue for enhancing the cooperation.

He said that Pakistan would also talk on Trade and Investment Framework to exploit more potential avenues for promoting trade in different sectors.

Razak said, he would also meet the US Secretary for trade to explore potential sectors for enhancing trade.

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SBP designates Domestic Systemically Important Banks

July 18, 2019: The State Bank of Pakistan (SBP) on Thursday announced the designation of Domestic Systemically Important Banks (D-SIBs) for the year 2019 under the Framework for Domestic Systemically Important Banks (D-SIBs) that was introduced in April 2018.

The framework introduced by State Bank is consistent with the international standards and practices and takes into account the local dynamics, said a SBP press statement received here.

It specifies the methodology for the identification and designation of D-SIBs, enhanced regulatory and supervisory requirements, and implementation guidelines, the statement said adding that these enhanced requirements aim to further strengthen the resilience of the Systemically Important banks against shocks and augment their risk management capacities.

The identification of D-SIBs involves two-step process as in the first step, sample banks are identified each year based on the quantitative and qualitative criteria while in the second step, D-SIBs are designated from among the sample banks on the basis of institutions’ systemic score in terms of their size, interconnectedness, substitutability, and complexity. 

In line with D-SIBs framework, State Bank has carried out the annual assessment on the basis of financials of end December 2018.

As per this assessment, three banks viz.  Habib Bank Ltd., National Bank of Pakistan, and United Bank Ltd. have been designated as D-SIBs for the year 2019.

These banks will be subject to enhanced supervisory requirements and higher capital surcharge in the form of additional common equity tier-1 capital (CET-1) with effect from March 31, 2020.

The additional CET-1 requirement for National Bank of Pakistan and Habib bank would be 2 percent and for United Bank it would be 1 percent.

Besides, branches of Global-Systemically Important Banks (G-SIBs) operating in Pakistan will hold additional CET1 capital against their risk-weighted assets in Pakistan at the rate as applicable on the respective principal G-SIB.

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Services sector grows by 4.7 percent in FY19: SBP

July 18, 2019: The services sector of the country grew by 4.7 percent during the financial year 2018-19, representing a slowdown when compared to last year.

According to SBP’s third quarterly report on the State of Pakistan’s Economy, the growth was also lower than the annual target of 6.5 percent.

The report stated that growth in the wholesale and retail trade segment more than halved during FY19 compared to last year.

On one hand, the lackluster performance of the commodity-producing sectors dragged the output of the sub sector to some extent, it said adding that on the other hand, despite a net contraction in Large Sclae Manufacturing (LSM) and crops, the increase in wholesale and retail trade still reflected higher price impact of imports, due to exchange rate depreciation, despite the decline in their growth in FY19.

Transport, storage and communication performed better during FY19 compared to a year earlier while growth in road transport, one of the heavyweight segments, nearly doubled compared to last year.

Also noteworthy was the continuing improvement in the railways segment. According to official sources, Pakistan Railways generated higher earnings during Jul-Mar FY19 compared to a year earlier, having introduced 24 new trains as well as a trains tracking system which helped improve fuel efficiency.

Meanwhile, growth in the air transport segment remained at 3.4 percent, similar to last year. The Third Quarter of FY19 period appeared to offer some respite to PIA, as the national flag carrier claimed to have reached operational break-even during the period.

Elsewhere, in the telecom sector, cellular teledensity continued to rise, from 72.8 percent as of June 2018 to 75.9 percent by end-March 2019; similarly, broadband penetration increased from 28.3 percent as of June 2018 to 32.6 percent as of March 2019.

The Q3-FY19 period was an eventful one for PTCL, with profits for the three-month period nearly doubling compared to a year earlier.

Finance and insurance also witnessed a slowdown compared to last year, it said adding the lower growth in gross value addition by scheduled banks, which have the greatest share in the segment, set the tone for the moderation in the face of subdued growth of deposits while their investments declined.

Meanwhile, performance of the equity market remained dismal. Since the portfolio of insurance companies and mutual funds is largely dominated by investments in equity market, that also adversely effected the segment’s performance.

From a long-term perspective, it is worth highlighting that gaps in logistics performance may have prevented the services sector from realizing its full potential over the years.

This especially applies to segments like wholesale and retail trade and transport, storage and communication, which have the largest weight within services.

More broadly, better logistics can also enhance the output of commodity-producing sectors, and thus impact real GDP growth as a whole. Thus, being mindful of and addressing the gaps in logistics performance merits high priority...

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