PAKISTAN ECONOMY: Pakistan’s benchmark stock index, the KSE-100, experienced its most significant surge in a year on Thursday, buoyed by the unveiling of the 2024-25 budget, which alleviated market concerns about potential hikes in capital gains and dividend taxes.
The KSE-100 index soared by 3,410.7 points, or 4.7%, reaching an unprecedented high of 76,208 points. This marked the largest single-day increase in point terms in the index’s history and the highest percentage gain since the International Monetary Fund’s (IMF) bailout package last year.
PAKISTAN ECONOMY: USD TO PKR
The budget’s announcement also impacted the currency market. The Pakistani rupee (PKR) appreciated by 1.64 paisa against the US dollar, closing at PKR 278.59 per USD in Thursday’s interbank session, compared to the previous session’s closing of PKR 278.61 per USD. The domestic currency saw upward momentum against the USD following the budget announcement, which is expected to lay the foundation for a larger and extended program with the IMF, aiming to achieve economic stability.
In comparison to major currencies, PKR lost 1.89 rupees against the Euro, closing at 301.28 compared to the previous value of 299.39. The British Pound became more expensive by 98.2 paisa, closing at 356.26 compared to 355.28 from a day ago. The Swiss franc saw gains of 62.36 paisa, closing at 311.26 compared to 310.63 from the previous session. Against the Japanese Yen, PKR gained 0.03 paisa, closing at 1.7713 versus 1.7716 a day ago. The Chinese Yuan gained 0.78 paisa, closing at 38.42 against 38.41 from the previous session. The Saudi Riyal closed at 74.27 with a loss of 1.43 paisa from its value of 74.28 a day ago. The U.A.E Dirham decreased in value by 0.55 paisa from 75.85 a day ago to 75.85.
During the current financial year, PKR has appreciated against the Dollar by 7.4 rupees or 2.66%. While the current calendar year has seen PKR appreciate by 3.27 rupees or 1.17%.
In the Money Market, the benchmark 6 Month Karachi Interbank Bid and Offer rates inched down by 4 bps to 19.82% and 20.07%, respectively.
PAKISTAN ECONOMY: GOLD PER TOLA
The price of 24-karat gold in Pakistan decreased on Thursday, with gold being sold at Rs240,700 per tola, down Rs1,200 per tola. The Karachi Sarafa Association reported the price of 24-karat gold at Rs206,361 per tola per 10-gram, down Rs1,029 per tola. The price of 22-karat gold was quoted lower at Rs189,165 per 10-gram. On the other hand, silver prices remained unchanged in the domestic market, with 24-karat silver being sold at Rs2,750 per tola and Rs2,358 per 10-gram.
On the global front, spot gold traded near $2,305 an ounce, down $15.5 or 0.67% from the previous session. A report on Wednesday showed the US core consumer price index fell to its lowest in more than three years, spurring bets on faster policy easing. Later, the Federal Reserve penciled in just one quarter-point interest-rate cut this year, down from three seen in March. Swap traders are currently pricing in a 25-basis-point rate cut by November, with a 75% likelihood of a similar reduction by year-end. This compares with a 50% chance of a second cut two days ago. US producer prices may offer more signals later on Thursday.
The budget’s impact on the stock market has been overwhelmingly positive, dispelling fears regarding tax hikes and instilling confidence among investors. As the fiscal year progresses, the market will likely monitor the implementation of budget measures and their alignment with broader economic stabilization efforts under the IMF program.
DAILY PAKISTAN ECONOMY: ECC DIRECTS OGDCL TO SETTLE GOVERNMENT LIABILITIES, APPROVES RS82 BILLION REPAYMENT FOR PHL
Islamabad, June 14, 2024 — The Economic Coordination Committee (ECC) has instructed the Oil and Gas Development Company Limited (OGDCL) to settle its outstanding liabilities to the government. This directive follows the committee’s approval of a significant recovery for the company.
During a meeting chaired by Federal Minister for Finance and Revenue Muhammad Aurangzeb, the ECC reviewed and approved the Power Division’s summary, which entitles OGDCL to a repayment of Rs82 billion. This repayment is for the finance facility extended by OGDCL to Power Holding Limited (PHL).
The meeting was attended by key government officials, including Minister for Industries & Production Rana Tanveer Hussain, Minister for Petroleum Musadik Masood Malik, Minister for Power Sardar Awais Ahmad Khan Leghari, Minister of State for Finance & Revenue Ali Pervez Malik, federal secretaries, and senior officials from relevant ministries.
In addition to the repayment approval, the ECC also sanctioned significant technical supplementary grants and proposals from other ministries.
DAILY PAKISTAN ECONOMY:ECC APPROVES RS9 BILLION FOR OMCS TO SETTLE PRICE DIFFERENTIAL CLAIMS
The Economic Coordination Committee (ECC) has also approved a proposal from the Petroleum Division to release Rs9 billion to Oil Marketing Companies (OMCs), including Pakistan State Oil (PSO). This amount will be used to settle outstanding price differential claims.
This decision was made during the same meeting chaired by Federal Minister for Finance & Revenue Muhammad Aurangzeb, with participation from various ministers and senior officials.
SBP’S FOREIGN EXCHANGE RESERVES DECREASE BY $6.2 MILLION
The State Bank of Pakistan (SBP) reported a decrease of $6.2 million or 0.07% in its foreign exchange reserves, bringing the total to $9.1 billion for the week ending June 7, 2024. Despite this decrease, the country’s total reserves increased by $168.2 million or 1.18% to $14.38 billion, supported by a rise in reserves held by commercial banks, which grew by $174.4 million or 3.42% to $5.28 billion.
This development comes on the heels of the government presenting the budget for 2024-25, which includes increased taxes aimed at boosting revenue and improving the prospects of securing a new loan from the International Monetary Fund (IMF). Pakistan is currently negotiating with the IMF for a larger and longer-term loan estimated at $6-$8 billion.
In the current fiscal year, SBP-held reserves have surged by $4.64 billion or 103.81%, largely due to the IMF Stand-By Arrangement (SBA) of about $3 billion secured by the end of June last year. This arrangement has also helped unlock additional multilateral and bilateral funding. Overall, the current calendar year has seen an increase in reserves of $882.1 million or 10.73%
Based on the data provided:
- State Bank of Pakistan’s foreign reserves decreased from 9,109.5 to 9,103.3, a change of -6.2 million USD, which is a decrease of -0.07%.
- Net Foreign Reserves Held by Banks increased from 5,106.1 to 5,280.5, a change of +174.4 million USD, which is an increase of 3.42%.
- Total Liquid Foreign Reserves increased from 14,215.6 to 14,383.8, a change of +168.2 million USD, which is an increase of 1.18%.
These figures indicate the movement and percentage changes in Pakistan’s foreign reserves as of June 7, 2024, compared to May 31, 2024.
