The Pakistani Rupee is poised to gain over Rs. 55 or 20 percent in the coming months to rise to as high as 220 against the US Dollar from today's level of 277.9/$. The real interest rate has moved into positive territory for the first time in 3 years, which will help reduce debt financing costs and reduce forex pressure. Last month, American multinational financial services company Goldman Sachs said in a report that positive interest rates could be the catalyst needed for PKR's recovery if inflation starts declining. An ex-senior central bank official told ProPakistani in exchange for anonymity, Every quarter there's a special indicator determining currency levels. In my view, real interest rates will help move PKR in the 220-230 range by early 2025. Inflation is showing a downward trend, which improves the likelihood of higher real positive interest rates in the future. Looks like the State Bank will cut its key lending rate soon, so the real positive rate will move even higher. Consequently, the real co st of Pakistan's debt financing will decrease, which will help improve the PKR's position against top currencies. He also drew attention to last week's treasury bill auction where SBP raised cut-off yields for a mid-tier treasury bill by 1 percent. 'I was surprised. The regulator must clarify this. Doesn't make sense with inflation going down. Are we intentionally misreporting inflation data? The next MPC press release better explain this,' he commented. It is pertinent to mention that the current fiscal year's second last meeting of the monetary policy committee is on 29 April 2024. Mixed Views 'But the rupee bulls have a tough lap to finish this year. Disinflation will definitely help PKR post double-digit gains. A lending help by the International Monetary Fund this month may offer further support to real interest rates and the rupee. Any problems pertaining to short-term rollover arrangements with other creditors threaten to unleash the opposite effect,' the official further said. In another world, s ome traders who have been hoarding US dollars since the February 8 elections see the country's balance of payment crisis to worsen due to a possible supply crunch in oil markets worldwide. Some importers are getting dollars easily through banking channels. A few traders maintain that the rupee's losing streak in the last 2 weeks of March was due to demand-and-supply issues. There was draconian pressure from importers who were anticipating higher profits in the days ahead. The country's latest trade numbers revealed that Pakistan's import bill had gone up by almost 26 percent in March 2024. This was seen in other commodity pullbacks i.e. inflation which didn't make the cut in last month's import bill, giving importers no other option but to hold dollars for a little more time. Reports suggest most of them are waiting for banks to buy them out at premium quotes. Expectations From what this analyst has seen in the year so far, 2024 will be another year where foreign factors will determine the PKR trend. Bes ides the local currency, Pakistan's dollar bonds are expected to rise this year. This assumption is based on some of the world's leading money managers banking on the IMF to extend another bailout to Pakistan. Everything is based on the coalition government adhering to the new IMF program which may be offered to Pakistan sometime before end-April 2024. This would definitely require reforms such as hiking fuel and electricity rates even higher, which is this analyst's baseline argument - and fear. Source: Pro Pakistani
Utility Stores Posts Highest Ever Sales of Rs. 44 Billion During Ramadan
Utility Stores Corporation USC) has recorded its highest-ever sales of Rs. 44 billion during Ramadan. This is the first time that USC surpassed its Rs. 40 billion sales target under the Prime Minister's Relief Package, reported a national daily. USC spokesperson hailed the corporation for meeting and exceeding sales targets. The government's subsidy of Rs 12.5 billion channeled through USC, played a pivotal role in ensuring the affordability and availability of essential items during Ramadan. The spokesperson highlighted the role of modern technology and computerization in streamlining USC operations. The adoption of advanced technology has enabled efficient monitoring of transactions, ensuring transparency and accountability, he added. In FY23, the corporation recorded its highest-ever recorded sales of Rs. 137.155 billion. The net profit for the state-run utility in the last financial year amounted to Rs. 764 million. The increase was attributed to government subsidies on essential items such as flour, sugar, ghee, pulses, and rice. USC has been consistently profitable for three consecutive years. In FY22, the sales figure stood at Rs. 112.32 billion, while it clocked in at Rs. 120.24 billion in FY21. Source: Pro Pakistani
Govt Plans to Raise Rs. 2.47 Trillion in 3 Months Via T-Bills
The government plans to raise Rs. 2,475 billion through auction of market treasury bills (MTBs) during April-June 2024, according to the auction calendar shared by the State Bank of Pakistan (SBP) last week. The aim for MTBs during this period is to secure Rs. 2,475 billion, a figure that exceeds the maturing amount of Rs. 2,123 billion. The central bank has scheduled seven MTB auctions during the last 3 months of the current fiscal year. The month of April will see three auctions of categorized MTBs. The first auction was held on 3 April, while the remaining two will be held on 17 April and 30 April. Two auctions will held in May while another two in June. The government plans to raise Rs. 1,050 billion through auctions scheduled for April, Rs. 600 billion in May, and Rs. 825 billion in June. Data reveals the government aims to raise Rs. 825 billion each through 3-month, 6-month, and 12-month MTBs. Source: Pro Pakistani
Pakistan’s Economy is Plagued By Political Instability: ADB
The future of Pakistan's economy is plagued by political instability and potential disruptions from Middle East conflicts could affect supply chains, the Asian Development Bank (ADB) said in a report on Thursday. ADB said Pakistan's reliance on external financing makes policy implementation crucial. It urged IMF support for reforms to boost market confidence and attract affordable financing. Economic growth is projected at 2.8% for FY25, driven by confidence, reforms, and stability. Meanwhile, ADB sees growth to remain slow in FY24 but improve with reforms. Inflation is projected at 25 percent for 2024, driven by energy prices, but expected to ease in 2025. Food supply may improve and energy price hikes could sustain inflation. ADB said despite challenges, growth in agriculture and manufacturing is anticipated. The lender remarked that relaxation of import restrictions and economic recovery may widen the current account deficit to 1.5 percent of GDP in 2024. Pakistan faces challenges in securing external financing, but tax reforms have boosted revenue collection by 29.5 percent. Further tax reforms will strengthen revenue mobilization, it added. Source: Pro Pakistani