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SBP Foreign Exchange Reserves Increase by $33 Million, Reach $9.44 Billion

Aarooj Manzoor
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SBP Foreign Exchange Reserves Increase by $33 Million, Reach $9.44 Billion

SBP Foreign Exchange Reserves Rise by $33 Million, Reaching $9.44 Billion

The State Bank of Pakistan (SBP) witnessed a modest increase in its foreign exchange reserves, which rose by $33 million on a weekly basis, bringing the total reserves to $9.44 billion as of August 30, 2024. This marks the second consecutive week of growth in the country’s forex reserves, highlighting a gradual improvement in Pakistan’s financial position.

Foreign Exchange Reserves Breakdown

According to data released by the central bank, the country’s total liquid foreign reserves now stand at $14.74 billion. Out of this, $9.44 billion is held by the SBP, while $5.30 billion is in the custody of commercial banks. Although the central bank did not provide specific reasons for this increase, the steady rise is a positive indicator of the nation’s improving liquidity situation.

  • SBP Reserves: $9.44 billion
  • Commercial Bank Reserves: $5.30 billion
  • Total Liquid Reserves: $14.74 billion

Gradual Increase in SBP Reserves

In the previous week, SBP’s foreign exchange reserves had risen by a larger margin of $112 million, continuing a trend of weekly gains. This upward momentum could be attributed to inflows from various external sources, including remittances, exports, and foreign loans, though official confirmation of the reasons behind this week’s increase has not been provided.

Importance of Foreign Exchange Reserves

Maintaining healthy foreign exchange reserves is crucial for any country, especially for Pakistan, which is striving to stabilize its economy in the face of external debt obligations and fluctuating import costs. Reserves are essential for ensuring that the country can meet its international payment obligations, maintain exchange rate stability, and absorb economic shocks, particularly in uncertain global financial conditions.

Future Outlook

While the recent rise in reserves is a positive development, Pakistan still faces significant economic challenges, including managing external debt, balancing import-export dynamics, and ensuring sustainable economic growth. The increase in SBP-held reserves, though modest, reflects the government’s ongoing efforts to improve financial stability.

Continued growth in foreign exchange reserves would offer Pakistan greater flexibility in managing its economic affairs, providing a buffer against external economic pressures. However, the country must continue its pursuit of long-term economic reforms to maintain and build upon this progress.

Conclusion

The $33 million increase in SBP-held foreign exchange reserves brings the total to $9.44 billion, marking a steady improvement in Pakistan’s financial position. With the country’s total liquid reserves now standing at $14.74 billion, this gradual growth highlights the importance of prudent financial management and the need for sustained efforts to stabilize the economy. While challenges remain, these developments offer hope for continued financial resilience.

Pakistan Seeks $1.75 Billion in Loans from International Financial Institutions

Aarooj Manzoor
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Pakistan Seeks $1.75 Billion in Loans from International Financial Institutions

Pakistan Seeks $1.75 Billion in Loans from International Financial Institutions

Pakistan is seeking $1.75 billion in loans from three major international financial institutions as part of its broader strategy to meet essential financing needs. According to top sources, the Finance Ministry has applied for loans from the Islamic Trade Finance Corporation (ITFC), the Islamic Development Bank (IDB), and Standard Chartered Bank. These funds will be allocated to cover key commodity purchases and support critical infrastructure development projects.

Breakdown of the Loan Requests

Of the total $1.75 billion, the Finance Ministry is requesting $400 million from the ITFC. This loan will be used primarily for the purchase of essential commodities, helping Pakistan maintain steady supplies of crucial goods in light of rising demand and fluctuating global prices.

In addition to the ITFC loan, $350 million is being sought from the Islamic Development Bank (IDB) to finance specific infrastructure projects across the country. This financing is expected to bolster the development of essential infrastructure, which is vital for Pakistan’s long-term economic growth.

The largest portion of the loan package, $1 billion, is being requested from Standard Chartered Bank. This loan will be used predominantly to fund major infrastructure projects, further strengthening the country’s development initiatives and creating a foundation for sustainable growth.

Key Drivers Behind the Loan Applications

These loans are a crucial part of Pakistan’s broader economic strategy, particularly as it seeks to meet critical financing commitments set by the International Monetary Fund (IMF). The IMF recently approved a new $7 billion loan program for Pakistan, aimed at stabilizing the country’s economy and supporting fiscal reforms. Meeting the conditions of this program, however, requires Pakistan to secure additional funding from various sources to cover essential expenditures and debt obligations.

Terms of the Loans and Expected Impact

The loans are expected to come with a long-term repayment period, offering Pakistan some financial relief as it continues to navigate economic challenges. According to sources, the interest rates on these loans are expected to be around 5 percent. While this rate is relatively moderate, it is part of a broader financial strategy that also involves negotiating with commercial banks for higher-interest loans when necessary.

In parallel with these loan applications, Pakistan is also working to restart a stalled oil loan facility with Saudi Arabia, further broadening its efforts to secure much-needed external financing.

The Broader Context of Pakistan’s Economic Strategy

Pakistan’s reliance on international loans is a reflection of the country’s ongoing efforts to stabilize its economy amidst a complex mix of internal and external challenges. Rising inflation, fluctuating commodity prices, and a need for critical infrastructure development have prompted the government to explore various financing options.

At the same time, these loans will help Pakistan achieve key economic objectives, such as ensuring stable commodity supplies and progressing on much-needed infrastructure projects. These projects are vital for the country’s long-term economic health, creating jobs, improving public services, and enhancing connectivity both within Pakistan and with neighboring markets.

 

Gold Prices Fall by Rs1,400 Per Tola in Pakistan Amid Global Decline

Aarooj Manzoor
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Gold Prices Fall by Rs1,400 Per Tola in Pakistan Amid Global Decline

Gold Prices See a Sharp Decline in Pakistan Amid Global Market Trends

Gold prices in Pakistan witnessed a notable decrease for the second consecutive session on Wednesday, aligning with the downward trend in international markets. The price of gold per tola (approximately 11.66 grams) fell by Rs1,400, bringing the rate down to Rs260,100. This drop reflects the broader global trend, as investors adjust their positions amid fluctuating market conditions.

Detailed Breakdown of Gold and Silver Prices

According to the latest data from the All-Pakistan Gems and Jewellers Sarafa Association (APGJSA), the price of 10-gram gold also decreased significantly, losing Rs1,200 to settle at Rs222,994. This follows a decline on Tuesday, where gold prices dropped by Rs1,000, bringing the rate to Rs261,500 per tola.

In the international market, gold prices saw a reduction on Wednesday, with rates falling by $17, setting the price at $2,481 per ounce, including a $20 premium. This decline in global prices is a key driver behind the reduction in local gold rates.

Silver prices also mirrored the trend, with a decrease of Rs50, bringing the price down to Rs2,900 per tola. This decline in both gold and silver prices comes after a recent peak, where gold prices hit a record high of Rs263,700 per tola last month in Pakistan.

Understanding the Market Trends

The recent drop in gold prices can be attributed to several factors, including global market dynamics, investor sentiment, and economic indicators that influence the precious metals market. The international market has been experiencing volatility, with investors re-evaluating their portfolios amid concerns over inflation, interest rates, and currency fluctuations.

For investors in Pakistan, the current dip in gold prices presents both opportunities and challenges. On one hand, it may be a good time to purchase gold at lower prices; on the other, the continuing uncertainty in global markets means that prices could remain volatile in the short term.

Implications for Investors

As gold and silver prices fluctuate, it is crucial for investors to stay informed and consider both local and international factors that could impact their investment decisions. The recent decline in gold prices, while significant, is part of a broader trend that reflects global market conditions.

For those looking to invest in gold, this period could represent a buying opportunity, especially if prices stabilize or begin to rise again. However, caution is advised, as market conditions can change rapidly, and it is essential to have a clear strategy in place.

 

J.P. Morgan Explores Investment Opportunities in Pakistan

Aarooj Manzoor
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J.P. Morgan Explores Investment Opportunities in Pakistan

J.P. Morgan Explores Investment Opportunities in Pakistan: A High-Level Engagement

In a significant move towards enhancing foreign investment, Pakistan’s Federal Minister for Finance and Revenue, Muhammad Aurangzeb, held a high-level meeting with a delegation of international investors led by Amin Mohammad Khowaja, CEO of J.P. Morgan Pakistan. The meeting, which took place on Wednesday, focused on the potential for fixed-income investments in Pakistan’s rapidly evolving economy.

Institutional Investors Eye Key Sectors

The discussion primarily revolved around the interests of institutional investors in several promising sectors of Pakistan’s economy. According to the Finance Division’s statement, the delegation explored various avenues for investment, including renewable energy, information technology, infrastructure development, and the financial sector.

The investors highlighted Pakistan’s strategic significance as a gateway to regional markets, recognizing its potential as a lucrative destination for foreign capital. The Finance Minister assured the delegation of the government’s unwavering support in facilitating these investment ventures, emphasizing the importance of their contributions to Pakistan’s economic growth.

Economic Progress and Investment Climate

During the meeting, Aurangzeb underscored recent economic developments that have bolstered Pakistan’s investment climate. He pointed to a remarkable 14% increase in exports, a decline in Consumer Price Index (CPI) inflation to 9.6% in August 2024, and a significant reduction in the Current Account deficit.

These positive economic indicators have been complemented by improvements in Pakistan’s sovereign credit ratings, reflecting a stable and promising economic outlook. The Finance Minister highlighted that the country’s economic growth is supported by robust fiscal discipline, effective inflation management, and a favorable balance of payments.

Government’s Reform Agenda: A Catalyst for Growth

Aurangzeb also elaborated on the government’s comprehensive structural reforms aimed at ensuring macroeconomic stability and creating a more conducive environment for foreign investment. These reforms include broadening the tax base, rightsizing the public sector, advancing a privatization drive, and implementing energy sector reforms.

The Finance Minister reaffirmed the government’s commitment to carrying forward this reforms agenda to enhance the efficiency and governance of public institutions. These initiatives are designed to foster a business-friendly environment, attract foreign investment, and ensure the long-term stability of Pakistan’s economy.

Investor Confidence and Future Prospects

The Finance Division’s statement noted that the investor delegation commended the government’s efforts to create a favorable investment climate. They expressed optimism about the prospects of increased investment flows into Pakistan, particularly in the highlighted sectors.

The discussions between the Pakistani government and international investors mark a significant step towards unlocking Pakistan’s economic potential and positioning the country as a prime destination for global investment.

Conclusion: A Promising Outlook for Pakistan

With the government’s continued focus on economic reforms and its proactive approach in engaging with international investors, Pakistan is poised for a promising future. The collaboration with J.P. Morgan and other institutional investors could pave the way for substantial economic growth, driven by strategic investments in key sectors.

Multan District Administration Reduces Transport Fares by 2%

Khashif Sarfraz
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Multan District Administration Reduces Transport Fares by 2%

Multan District Administration Lowers Transport Fares Amidst Fuel Price Cut

In response to a recent decrease in petroleum prices, the district administration of Multan has announced a 2% reduction in commercial fares for both passenger and goods transport services. This initiative aims to provide financial relief to citizens amid fluctuating fuel costs.

Regional Transport Authority (RTA) Secretary Mohsin Nisar stated, “After consultations with transporters and under the leadership of the Deputy Commissioner of Multan, we have reduced fares by 2%. This reduction applies to both passenger services and goods transport agencies.”

Impact on Citizens

The decision has led to more affordable travel options for residents. A regular passenger commuting to Vahari shared, “Previously, the fare was 400 rupees, but now it’s been reduced by 50 rupees. However, the reduction in AC vehicle fares hasn’t been sufficient.”

Calls for Further Reductions in Fuel Prices

Citizens have welcomed the recent fare reduction but have appealed to the government to lower petroleum prices further to provide additional economic relief. This sentiment reflects a broader demand for sustained affordability in transportation costs, particularly in light of ongoing economic challenges.

Conclusion

The fare reduction by the Multan district administration marks a positive step toward easing the financial burden on citizens. However, the call for further reductions in fuel prices highlights the need for continued government action to address the economic concerns of the public.

Pakistan’s Merchandise Exports Surge 16% in August

Khashif Sarfraz
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Pakistan’s Merchandise Exports Surge 16% in August

Merchandise Exports Show Strong Growth in August

Pakistan’s merchandise exports increased nearly 16% to $2.74 billion in August 2024, compared to $2.36 billion in the same month last year, according to data released by the Pakistan Bureau of Statistics (PBS) on Tuesday. The growth momentum picked up in August due to improved international orders and exchange rate stability.

On a month-on-month basis, exports saw a substantial increase of 18.9% in August from the preceding month, demonstrating the resilience and adaptability of the export sector.

Cumulative Export Growth in July-August FY25

For the first two months of FY25, export proceeds reached $5.05 billion, marking an increase of 14% compared to $4.43 billion over the same period last year. In FY24, Pakistan’s merchandise exports grew by 10.54% to $30.64 billion from $27.72 billion in the preceding year.

Exports increased steadily from July 2023 until they turned negative in January 2024, with the downward trend persisting until April. However, growth regained momentum in May and continued into June.

Record-Breaking Exports in 2021-22 and Subsequent Decline

The highest-ever export level was achieved in FY22, reaching $31.78 billion. However, the following year saw a decline, with exports dropping to $27.54 billion. The recent surge in exports challenges the exporter associations’ claims about the potential negative impact of the tax measures outlined in the FY25 budget.

Trade Deficit Narrows Amid Rising Imports

While exports saw robust growth, imports increased by 5.67% to $8.63 billion in July-August FY25, compared to $8.16 billion over the last year. On a month-on-month basis, imports grew 4.92% in August.

The trade deficit narrowed by 4.30% to $3.57 billion in July-August FY25 from $3.74 billion over the last year. In August, the deficit further decreased by 20.54% to $1.67 billion from $2.11 billion last year. For the fiscal year 2024, the trade gap contracted to $24.08 billion from $27.47 billion in the preceding year.

Rice Exports Set Ambitious Targets

Commerce Minister Jam Kamal has urged rice exporters to aim for an export target of $5 billion for the current fiscal year. In FY24, rice exports stood at $4 billion, contributing significantly to the overall agricultural exports of $8 billion.

Sectoral Council for Rice Chairman Shahzad Malik expressed optimism about achieving a potential $10 billion rice export target by 2030, contingent on favorable climatic conditions and continued growth in export activities.

Conclusion

The latest data underscores a positive trend in Pakistan’s export sector, bolstered by external demand and improved economic indicators. Continued efforts to enhance trade relations and optimize export opportunities could further bolster the country’s economic standing in the global market.

Pakistan Stock Market Ends Volatile Session

Khashif Sarfraz
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Pakistan Stock Market Ends Volatile Session

Market Overview: Positive Close Amid Volatility

The Pakistan Stock Exchange (PSX) managed to close in the green on Tuesday, overcoming a volatile trading session. The positive close was primarily driven by expectations of a third consecutive interest rate cut by the State Bank of Pakistan (SBP) in its upcoming Monetary Policy Committee meeting scheduled for September 12.

Ahsan Mehanti, an analyst at Arif Habib Corporation, attributed the market’s upward movement to upbeat data on Consumer Price Index (CPI)-based inflation, which stood at 9.6% for August. He also highlighted reports of the government’s plan for a strategic sale of blue-chip state-owned enterprises to foreign investors, further boosting market sentiment.

Market Performance Highlights

  • Index Movement: The benchmark index experienced significant fluctuations, reaching an intraday high of 78,645 and a low of 78,251, before settling at 78,356.32 points, reflecting a gain of 73.02 points or 0.09% day-on-day.
  • Key Contributors: The upward movement was primarily driven by gains in key stocks, including Millat Tractors Ltd, Mari Petroleum, United Bank Ltd, Oil and Gas Development Company Ltd, and HabibMetro Bank, collectively adding 96 points to the index.

Volume and Trading Activity

  • Trading Volume: The trading volume decreased by 4.50% to 436.67 million shares.
  • Traded Value: The traded value also dropped by 22.79% to Rs12.25 billion.

Top Traded Stocks

The stocks with the highest trading volumes were:

  • Kohinoor Spinning Mills Ltd: 83.94 million shares
  • Symmetry Group: 37.13 million shares
  • Agha Steel Industries: 21.56 million shares
  • Yousaf Weaving Mills: 19.79 million shares
  • Flying Cement: 17.40 million shares

Gainers and Losers

Top Gainers in Absolute Terms:

  • Nestle Pakistan: Up by Rs139.17
  • Mari Petroleum: Up by Rs66.56
  • Hallmark Company: Up by Rs44.69
  • Millat Tractors: Up by Rs28.94
  • Pakistan Services: Up by Rs20.55

Top Losers in Absolute Terms:

  • Unilever Foods: Down by Rs163.50
  • Khyber Textile Mills: Down by Rs67.38
  • Pak Engineering: Down by Rs45.74
  • Colgate-Palmolive: Down by Rs18.17
  • Highnoon Lab: Down by Rs17.21

Foreign Investor Activity

Foreign investors largely stayed out of the trading arena, with net purchases amounting to a mere $0.000750 million.

Conclusion

The PSX’s positive close, despite a turbulent session, reflects optimism around the potential for further interest rate cuts and strategic economic initiatives. Market players will continue to watch for developments leading up to the SBP’s policy announcement on September 12.

KCCI Urges NEPRA to Address Concerns over K-Electric Charges and Surcharges

Khashif Sarfraz
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KCCI Urges NEPRA to Address Concerns over K-Electric Charges and Surcharges

KCCI Calls for Urgent NEPRA Hearing on K-Electric Issues

The Karachi Chamber of Commerce and Industry (KCCI) has called on the National Electric Power Regulatory Authority (NEPRA) to urgently convene a hearing with all relevant stakeholders to address pressing issues related to K-Electric (KE) that are significantly impacting both industrial and domestic consumers in Karachi.

In a letter addressed to NEPRA Chairman Waseem Mukhtar on Tuesday, KCCI President Iftikhar Ahmed Sheikh highlighted several concerns over the current power tariffs and surcharges imposed by KE.

PHL Surcharge and Its Financial Impact

Iftikhar Ahmed Sheikh expressed regret over the imposition of the Power Holding Limited (PHL) surcharge of Rs3.23 per unit, which he claims has placed a considerable financial burden on Karachi’s consumers.

He argued that this surcharge is unjust, as Karachi’s consumers are not participants in the circular debt issue. The KCCI president urged NEPRA to review and reconsider the continuation of this surcharge, emphasizing the need for a fairer approach to electricity pricing.

Disparity in Fuel Adjustment Charges

Sheikh also pointed out a significant disparity in fuel adjustment charges. While other distribution companies (Discos) in the country are passing on minimal fuel adjustments, K-Electric imposes higher adjustments ranging between Rs3 and Rs5 per unit. This discrepancy has further added to the financial strain on Karachi’s consumers.

KCCI’s Call to Action

The KCCI has urged NEPRA to take immediate steps to review the concerns raised by Karachi’s business community and consumers. Moreover, it calls for a transparent hearing to address these issues and find equitable solutions that align with the interests of all stakeholders.

Conclusion

Given the rising concerns over electricity surcharges and fuel adjustments, the KCCI’s call for an urgent hearing underscores the need for regulatory intervention to ensure fair electricity pricing for Karachi’s consumers.

Pakistan’s Trade Deficit Narrows Marginally to $3.6 Billion in 2MFY25

Aarooj Manzoor
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Pakistan’s Trade Deficit Narrows Marginally to $3.6 Billion in 2MFY25

Pakistan’s Trade Deficit Shrinks to $3.6 Billion in Early FY25

Pakistan’s trade deficit has shown a slight improvement, narrowing to $3.6 billion during the first two months of the fiscal year 2024-25 (2MFY25), according to recent data from the Pakistan Bureau of Statistics (PBS). This decrease is largely attributed to a significant boost in exports.

Trade Balance Overview

The trade balance, which represents the gap between exports and imports, stood at a deficit of $3.58 billion for the July-August 2024-25 period. This marks a modest decline from the $3.74 billion deficit recorded during the same period in the previous year.

Export Performance: A 14% Increase

Pakistan’s export sector delivered a strong performance in the first two months of FY25, with exports surging by 14% to reach $5.05 billion. This is a notable increase from the $4.43 billion recorded in the corresponding period of the previous year.

Imports Rise by 5.67%

On the import side, there was a 5.67% increase, bringing total imports to $8.63 billion during the 2MFY25 period. This is up from the $8.17 billion in imports during the same timeframe last year.

Monthly Trade Figures: A Detailed Look

The PBS report highlighted a significant decline in the trade deficit on a year-on-year basis for August 2024. The deficit dropped by 20.54%, falling to $1.68 billion from $2.11 billion in August of the previous year. This reduction is primarily due to strong growth in exports, which rose by 15.93% to $2.74 billion compared to $2.37 billion in August 2023.

Import and Export Trends in August 2024

In August 2024, imports slightly decreased by 1.25%, totaling $4.42 billion, down from $4.47 billion in the same month the previous year. On a month-on-month basis, the trade deficit also declined by 12.03%, dropping to $1.68 billion from $1.9 billion in July 2024.

Conclusion: A Mixed Outlook for Pakistan’s Economy

While the shrinking trade deficit and rising exports are positive signs for Pakistan’s economy, the increase in imports poses a challenge. The continued growth in exports will be crucial in balancing the trade deficit and supporting economic stability in the coming months.

1LINK Addresses Media Reports on ATM and Mobile Banking Outages in Pakistan

Aarooj Manzoor
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1LINK Addresses Media Reports on ATM and Mobile Banking Outages in Pakistan

1LINK Reassures Customers Amid Reports of ATM and Mobile Banking Disruptions

Recent media reports have highlighted concerns regarding potential disruptions in ATM services and mobile banking across Pakistan. Addressing these concerns, 1LINK, a leading payment system in Pakistan, has assured customers and stakeholders that its services are fully operational, offering uninterrupted access 24/7.

Official Statement from 1LINK

In an official press release, 1LINK emphasized that all banking touchpoints—including ATMs, mobile apps, internet banking, point-of-sale terminals, and agent networks—are functioning without any interruptions. “Our valued customers are informed that all banking touchpoints, including ATMs, mobile apps, internet banking, point-of-sale terminals, and agent networks, are fully operational on 1LINK products, with transactions proceeding at their usual pace,” the statement read.

Brief Service Degradation and Swift Restoration

1LINK acknowledged a brief period of service degradation that occurred yesterday evening, which may have affected some customers. However, the company swiftly restored transactional services, ensuring minimal disruption. Most customers who initially experienced service denial have since successfully completed their transactions, reaffirming the reliability of 1LINK’s infrastructure.

Surge in Transaction Volumes

Highlighting the robust performance of its network, 1LINK noted that yesterday’s transaction volumes exceeded the daily average for 2024. The company anticipates a similar trend today, with single-day transactions expected to surpass 5 million, amounting to an impressive Rs. 160 billion across interoperable ATMs and Interbank Funds Transfers (IBFTs). This surge in transaction volumes underscores the trust and confidence that banking customers place in 1LINK and its member banks.

1LINK’s Commitment to Seamless Banking Services

The recent events have demonstrated the resilience of 1LINK’s infrastructure, which continues to support the financial needs of millions of customers across Pakistan. By providing uninterrupted services and handling a surge in transactions, 1LINK has reinforced its commitment to ensuring a seamless banking experience for all its users.

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