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PSX Closing Bell: Falls to Climb

PSX Closing Bell: Falls to Climb

June 30, 2022 (MLN): The capital market on Thursday remained positive most of the time as the government has been complying with all the conditions put forth by the IMF. This results in restoration of investors’ confidence which led the benchmark KSE-100 index gained 243.10 points to close the index at 41,540.83.

Meanwhile, investors also rejoiced the upward journey of the Pakistani rupee (PKR) which has gained 2.4 rupees in four consecutive sessions to settle the week’s trade at PKR 204.85 per USD.

The Index traded in a range of 339.05 points or 0.82 percent of previous close, showing an intraday high of 41,559.06 and a low of 41,220.01.

Of the 92 traded companies in the KSE100 Index 52 closed up 38 closed down, while 2 remained unchanged. Total volume traded for the index was 112.65 million shares.

Sectors propping up the index were Commercial Banks with 111 points, Oil & Gas Exploration Companies with 59 points, Power Generation & Distribution with 27 points, Technology & Communication with 25 points and Cement with 23 points.

The most points added to the index was by HUBC which contributed 35 points followed by HBL with 23 points, PPL with 22 points, SYS with 21 points and MEBL with 20 points.

Sector wise, the index was let down by Fertilizer with 10 points, Automobile Assembler with 5 points, Chemical with 4 points, Cable & Electrical Goods with 4 points and Refinery with 3 points.

The most points taken off the index was by FFC which stripped the index of 26 points followed by MTL with 8 points, EFUG with 7 points, EFERT with 5 points and FCCL with 5 points.

All Share Volume increased by 50.70 Million to 192.90 Million Shares. Market Cap increased by Rs.34.30 Billion.

Total companies traded were 337 compared to 316 from the previous session. Of the scrips traded 168 closed up, 140 closed down while 29 remained unchanged.

Total trades increased by 3,878 to 86,001.

Value Traded increased by 1.44 Billion to Rs.6.79 Billion

CompanyVolume

Top Ten by Volume

K-Electric17,495,500
Agritech13,786,500
Fauji Cement Company13,104,000
Worldcall Telecom9,453,000
Pakistan Refinery8,060,653
Pak Elektron7,123,000
Pakistan International Bulk Terminal6,988,000
TPL Properties6,421,606
Cnergyico PK6,288,262
Pakistan Petroleum6,024,940

 

SectorVolume

Top Sector by Volume

Cement28,721,596
Power Generation & Distribution23,216,106
Technology & Communication19,926,885
Chemical19,215,588
Commercial Banks17,481,158
Refinery15,267,025
Oil & Gas Exploration Companies11,104,019
Cable & Electrical Goods7,445,500
Transport7,257,200
Miscellaneous6,858,606

 

 

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PKR closes at 204.85/USD

PKR closes at 204.85/USD, up by 2.4 rupees in...

June 30, 2022 (MLN): Rejoicing the positive news on the IMF front which would also pave the way for fresh inflows from other friendly countries, the Pakistani rupee (PKR) has gained 2.4 rupees in four consecutive sessions to settle the week’s trade at PKR 204.85 per USD.

In today’s session, the domestic unit has appreciated by 25 paisa after being traded in a band of 1.42 rupees, showing an intraday high bid of 205.17 and an intraday low offer of 204.20. While, in the open market, PKR was traded at 202.50/204.50 per USD.

In response to the announcement of the Memorandum of Economic and Financial Policies (MEFP) received from IMF for the combined 7th and 8th reviews, PKR started making gains against the US dollar in the inter-bank market.

Experts are of the view that this was the most significant step to validate that both sides have reached an agreement for the revival of $6 billion programs.

MEFP includes an increase in electricity tariffs, imposing a levy on petroleum products, ending the government’s role in determining the oil prices, and setting up an anti-corruption task force to review all the existing laws that were aimed at curbing graft in the government departments.

After implementing the conditions, the IMF would present Pakistan’s request for the approval of the loan tranche and revival of the program to its executive board – a process that may consume another month.

The government is on its toes to unlock the IMF deal as soon as possible to bring the economic stability back. As a result, the National Assembly on Wednesday passed the Finance Bill-2022 after clause-by-clause consideration and adopting certain amendments in it.

During the debate on the Finance Bill, Minister of State for Finance and Revenue Aisha Ghaus Pasha said that there had been no pressure from the fund to integrate amendments in the federal budget 2022-23 saying that the changes had been made in the larger interest of the country.

Speaking to Mettis Global, Zafar Paracha, President of Exchange Companies of Pakistan said, “Despite the expected inflows from IMF, China and Saudi, PKR will remain under pressure in the long term as the government has to repay debts in FY23.”

Earlier on Friday, the State Bank of Pakistan (SBP) received a $2.3 billion loan from a Chinese consortium that also improved traders' sentiments.

During FY22, the local unit plummeted by Rs47.30 or 23.09% against the USD. Similarly, the rupee fell by Rs28.33 or 13.83% in CYTD, with the month-to-date (MTD) position showing a decline of Rs6.38 or 3.12%, as per data compiled by Mettis Global.

During the last 52 weeks, PKR lost 22.93% against the greenback while reaching its lowest at 211.93 on June 22, 2022, and the highest of 157.87 on July 02, 2021.

Furthermore, the local unit has weakened by 12.64% since its high on July 02, 2021, against EUR while, it has dropped by 12.56% against GBP since its high on July 02, 2021.

The performance of the local unit remained bleak against other major currencies in FY22 as the currency weakened by 23.09%, 23.06%, 20.37%, 20.29%, 12.41%, 12.28%, and 5.21% against AED, SAR, CHF, CNY, EUR, GBP, and 5.21%, respectively.

Meanwhile, the currency gained 1.6 rupees against the Pound Sterling as the day's closing quote stood at PKR 248.48 per GBP, while the previous session closed at PKR 250.04 per GBP.

Similarly, PKR's value strengthened by 1.8 rupees against EUR which closed at PKR 213.81 at the interbank today.

On another note, within the money market, the overnight repo rate towards the close of the session was 12.75/12.80 percent, whereas the 1-week rate was 12.95/13.05 percent.

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OMO Result: SBP mops up Rs392.5 billion for 4 days

OMO Result: SBP mops up Rs392.5 billion for 4...

June 30, 2022 (MLN): The State Bank of Pakistan (SBP) conducted an Open Market Operation today, in which it mopped up Rs392.5 billion from the market for 4 days at 13.65%.

Summary of OMO Result

 

 

Amount (Rs in Millions)

Rate (%)

Bids

Tenor

Type

Offered

Accepted

High – Low

Accepted

Offered

Accepted

4-Day

Repo (Mop-up)

392,500

392,500

13.5 – 13.65

13.65

12

12

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Euro area unemployment rate falls to 6.6% in May

Euro area unemployment rate falls to 6.6% in May

June 30, 2022: The euro area unemployment rate decreased to 6.6% in May, down from 6.7% a month ago, the EU statistical office said on Thursday.

The number of jobless people in the euro area fell by 81,000 from April, hitting 11 million in May, Eurostat data showed. The unemployment rate in the region was 8.1% in May 2021.

Nearly 2 million people under the age of 25 were unemployed in the euro area, bringing the youth unemployment rate last month to 13.1%. The unemployment rate for women fell to 7.1% in May while it was down to 6.2% for men.

The EU unemployment rate was 6.1% in May 2022, stable compared with this April and down from 7.3% in May 2021. Some 13.1 million people were jobless in the bloc as of May, down by 73,000 month-on-month.

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Preview: Pakistan to witness 13-year high inflation in June

Preview: Pakistan to witness 13-year high inflation in June

June 29, 2022 (MLN): From a fluffy cloud on the horizon to dark clouds hovering above our heads, inflation has turned into a perfect storm, exacerbated by the removal of energy subsidies amid soaring oil prices. While, in this inflationary environment, rising prices have inexorably been shrinking the real purchasing power of Pakistanis, hitting the poorer the hardest.

The consumer price index (CPI) which is due this Friday is likely to settle around 17.7%-19.8% with an average estimate of 18.82%-highest in over a decade, compared to 13.8% YoY in the last month and 10.9% YoY in June 2021.

This would bring FY22 average inflation to 11.98% as against 8.9% in the fiscal year 2020-21, well above SBP’s officially stated target of 9-11%.

Steve H. Hanke, Economist and professor at Johns Hopkins University said on Twitter that Pakistan’s inflation is standing at a stunning 43% per year.

While the monthly outlook of June 2022 by the Finance Ministry estimated that annual inflation is expected to accelerate in June and may hover around 14.5-15.5%. Withdrawal of subsidies to control the mounting twin deficit will be the main reason for this acceleration.

Further, the recent rise in international commodity prices especially energy and food will also be translated into domestic prices, the ministry noted.

Going by the projections put forth by various brokerage houses, the CPI, on a sequential basis, is expected to escalate with an average estimate of 4.19% MoM compared to the increase of 0.4% MoM in May 2022. This is due to fuel inflation and its impact on the food index which has been making headlines since the removal of energy subsidies in subservience to the IMF in resuming the stalled programme.

CPI Projections for June 2022

YoY (%)

MoM (%)

Spectrum Securities

18.87

4.24

AKD Securities

18.43

3.83

Abbasi and Company

19.80

5.00

Arif Habib Limited

18.80

4.17

Alfalah CLSA

19.60

4.80

Darson Securities

19.60

4.84

Pearl Securities

18.50

3.80

JS Global

19.20

4.53

Intermarket Securities

18.21

3.66

Insight Securities

19.10

4.30

Next Capital

18.40

3.80

Sherman Securities

18.50

3.90

Taurus Securities

17.70

3.20

Range

17.7-19.8

3.2-5

Mode

19.60

3.80

Median

18.80

4.17

Average

18.82

4.16

Expected Average Inflation in FY22

11.89%

 

The massive rise in fuel prices due to higher international oil prices, the end of subsidies, and the collection of PDL by the government would drive the CPI during the month, reflecting in the transportation index as the average petrol and diesel prices increased by 39% MoM and 48% MoM respectively.

Other than the energy inflation, which is likely to rise by 23% MoM, the food inflation would be the biggest driver of headline inflation as prices of both perishable and non-perishable food items show a major increase. The biggest jump would be seen in prices of potatoes, eggs, pulses, ghee, cooking and oil amid higher palm oil prices and the currency depreciation, up by 15%-35%.

An increase in beverage prices will also add to inflationary outturns in June as prices of tobacco continue to rise owing to supply constraints. Additionally, taxes in the current budgetary changes will also lead to higher inflationary outturns, going forward.

Inflation, IMF and Monetary Outlook

With the risk tilted to the upside on the back of currency depreciation and rising fuel prices from levies and taxes as the government brings budgetary changes, the fiscal year 2022-23 is expected to be a difficult year as it may settle in between 15-20%, the market expects.

In FY22, the central bank increased the policy rate by 675 basis points but the real interest rate is still hovering in the negative territory at 5.1%.

Since inflationary expectations have started to mount, SBP has restarted providing liquidity via higher tenor OMOs to stabilize cut-off yields in T-bill auctions despite high bids, said Wajid Rizvi, head of research at Intermarket Securities.

Despite SBP’s actions regarding enhancing liquidity, more importantly, to align with the proposed fiscal contractionary settings of Budget FY23, the market experts believe that the SBP would raise the policy rate by a further 50-150 bps in the upcoming MPC meeting on the 7th July 2022, in view of higher inflation forecast and likely agreement with the IMF.

In the latest Bloomberg report, the country would probably have to increase fuel prices along with the policy rate by 50 bps in the next quarter before it receives IMF cash.

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