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Tag: State Bank of Pakistan

  • PSX hits new record high, crossing 55,000 mark

    PSX hits new record high, crossing 55,000 mark

    The Pakistan Stock Exchange (PSX) maintained its bullish trend as the KSE-100 Index surged over 2 per cent, surpassing the 55,000 level and establishing a new record high at 55,391.36.

    This marked a notable gain of 1129.94 points, or 2.08 per cent, by the end of Friday’s trading session. The intra-day peak of 55,506.32 now stands as the highest level achieved by the KSE-100.

    Friday’s trading saw widespread buying activity, particularly in key sectors like automobile assemblers, cement, chemicals, fertilisers, power generation, distribution, refineries, and oil and gas exploration companies.

    The positive momentum was attributed to the results of a PIB auction, as noted by Mohammed Sohail, CEO at Topline Securities.

    Macro-economic factors also contributed to the positive market sentiment, including a reduction in the country’s current account deficit to $8 million in September 2023 compared to $360 million in the same month last year.

    Additionally, a decline in CPI-based inflation added to the favourable market conditions.

    Simultaneously, the Pakistani rupee continued its 14-session decline against the US dollar, settling at 287.03, a 0.05 per cent depreciation on Friday.

    In another development, overseas workers’ remittances reached $2.5 billion in October 2023, showing an 11.5 per cent increase compared to September 2023.

    Trading activity on Friday saw increased volume on the all-share index, rising to 640.8 million shares, with a total share value of Rs21.1 billion.

    Notable performers included Cnergyico PK and Pak Refinery in terms of traded volume.
    In summary, the PSX’s bullish momentum, driven by positive economic indicators and significant sectoral gains, propelled the KSE-100 Index to a historic high, supported by increased trading activity and positive developments in the currency and remittance sectors.

  • SBP orders bank closures in smog-affected Punjab districts

    SBP orders bank closures in smog-affected Punjab districts

    On Wednesday, the State Bank of Pakistan (SBP) announced the closure of bank branches in Lahore division and certain districts of Punjab severely affected by smog.

    According to a statement issued by the central bank, all banks and Micro Finance Banks (MFBs) are required to keep their branches closed in Lahore Division, including Lahore, Nankana Sahib, Sheikhupura, and Kasur districts, as well as Gujranwala, Hafizabad, Sialkot, and Narowal districts, on November 10.

    This decision was made in accordance with a notification from the Punjab government dated November 8, 2023. The Punjab government declared an “environmental and health emergency” in Lahore and two other divisions from November 9 to 12 to address the smog’s impact.

    According to the notification, all markets, shopping malls, restaurants, cinemas, gymnasiums, schools, and both public and private offices will remain closed for four days in Lahore, Gujranwala, and Hafizabad divisions. Public and private transport to and from these areas will also be restricted.

    Section-144 and health emergencies have been imposed in the Lahore division to control smog, following deteriorating air quality in the region over the past few days. Section 144 has been imposed in Lahore, Kasur, Sheikhupura, and Nankana Sahib districts.

    During environmental and health emergencies, educational institutions, government and private offices, cinemas, parks, and restaurants will remain closed, and markets will be shut on Saturday, as specified in the notification.

  • Pakistani rupee experiences 11th consecutive session of decline against US dollar

    Pakistani rupee experiences 11th consecutive session of decline against US dollar

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    The Pakistani rupee faced its eleventh consecutive session of losses against the US dollar, depreciating by 0.34 per cent in the inter-bank market on Monday.

    According to the State Bank of Pakistan (SBP), the rupee settled at 285.29, marking a decline of Re0.98.

    In the preceding week, the rupee had also suffered losses against the US dollar, closing 1.33 per cent lower at 284.31 in the inter-bank market, equivalent to a decrease of Rs3.74. This marked the third consecutive week of declines for the local currency.

    Prior to this recent trend, the Pakistani rupee had maintained a positive trajectory for 28 consecutive sessions, one of the longest appreciation runs, gaining a cumulative 10.93 per cent since reaching a record low of 307.1 in the inter-bank market on September 5.

    This surge was largely attributed to efforts to combat smuggling and increased controls on exchange companies.

    However, the situation has since shifted in favour of the US dollar, with global currencies remaining stable on Monday but appearing poised to continue their recent uptrend. This comes as the US dollar retreated following a moderation in the Federal Reserve’s hawkish stance.

    Internationally, major global currencies showed stability early on Monday, with the US dollar index flat at 105.11 and the euro at $1.0726.

    The dollar index experienced its most significant decline since mid-July, falling over 1 per cent last week and reaching a six-week low.

    Weakness in US job data, softer global manufacturing figures, and declining longer-term Treasury yields also contributed to the dollar’s weakened position.

  • More imports, less exports: Pakistan’s trade gap grows in October

    More imports, less exports: Pakistan’s trade gap grows in October

    Recent trade data for Pakistan reveals a monthly trade deficit increase of $0.6 billion, primarily driven by an $0.8 billion surge in imports.

    However, on an annual basis, the trade deficit is gradually shrinking at a modest rate of 4 per cent.

    This is not necessarily negative news, as import restrictions have been lifted as part of the İnternational Monetary Fund (IMF) programme while the economy is experiencing an uptick in demand.

    The encouraging aspect lies in the positive signs displayed by the export sector. The Pakistani rupee (PKR) has depreciated by approximately 35 per cent year-on-year, falling from PKR 220/USD to PKR 280/USD.

    Last year, exporters faced challenges in importing raw materials, machinery, and intermediate goods.

    Consequently, the 14 per cent year-on-year growth in exports, rising from $2.4 billion to $2.7 billion, is a heartening development, provided this trajectory continues.

    Recent measures by the State Bank of Pakistan (SBP) aimed at promoting exports, including competitive gas rates for exporters, reflect a positive intent.

    While industries reliant on gas may require more regionally competitive energy rates, the direction is favorable.

    Moreover, the alignment of open market and interbank exchange rates may encourage a shift from official channels.

    To address Pakistan’s economic challenges, two key corrections are imperative, among many others: increasing tax revenues and enhancing value-added exports.

    Depreciation of the currency alone cannot serve as the sole remedy for stimulating growth.

    To achieve a comprehensive economic framework, it is essential to boost the exports-to-GDP ratio beyond the current 8 per cent.

    This should encourage capitalists to prioritise exports and foreign direct investment (FDI) over property, fixed income, currency, and trading, ensuring sustained double-digit growth over the next five years.

  • State Bank of Pakistan maintains 22% policy rate in line with market consensus

    State Bank of Pakistan maintains 22% policy rate in line with market consensus

    Following the consensus in the broader market, the Monetary Policy Committee (MPC) of the State Bank of Pakistan (SBP) announced on Monday that it would maintain the key policy rate at 22 per cent, as stated in their press release.

    The Committee recognised that headline inflation, as expected, increased in September 2023 but anticipates a decline in October, followed by a sustained decrease, particularly in the latter half of the fiscal year.

    While the MPC acknowledged potential risks to the FY24 inflation outlook and the current account due to recent global oil price volatility and forthcoming gas tariff increases in November 2023, they also identified mitigating factors.

    These factors include targeted fiscal consolidation in the first quarter, enhanced availability of crucial commodities in the market, and the alignment of interbank and open market exchange rates.

    The MPC emphasised that the real policy rate, looking forward over a 12-month horizon, remains significantly positive.

    This is deemed appropriate to achieve the medium-term inflation target of 5-7 per cent by the end of FY25, contingent upon the sustained fiscal consolidation and timely realisation of planned external inflows, as articulated in the MPC statement.

  • State Bank of Pakistan set to announce policy rate decision today

    State Bank of Pakistan set to announce policy rate decision today

    The State Bank of Pakistan (SBP) will soon unveil its latest monetary policy for the upcoming two months.

    In an official statement, the central bank declared that the Monetary Policy Committee (MPC) of SBP will convene on Monday, October 30, 2023, to determine the monetary policy. SBP will then issue the Monetary Policy Statement via a press release on the same day.

    Currently, the State Bank’s policy rate stands at 22 per cent. Since October 2021, the central bank has increased its policy rate by a cumulative 1,500 basis points in an effort to combat rising inflation and bolster the external balance. This rate has remained unchanged since July 2023.

    The forthcoming policy rate announcement is poised to exert a substantial influence on Pakistan’s industries and inflation rate.

    In the most recent meeting held in July, the State Bank of Pakistan (SBP) resolved to maintain the interest rate at 22 per cent.

    The Monetary Policy Committee of the central bank meticulously assessed economic data and the prevailing inflation situation before opting to retain the interest rate. It’s worth noting that substantial progress has been achieved in the current account, thanks to government initiatives.

    This decision comes against the backdrop of Pakistan contending with a high inflation rate, currently pegged at 29.65 per cent.

  • State Bank of Pakistan’s forex reserves dip by $220 million in weekly report 

    State Bank of Pakistan’s forex reserves dip by $220 million in weekly report 

    The State Bank of Pakistan (SBP) witnessed a notable decline in its foreign exchange reserves, with a weekly reduction of $220 million, bringing the total to $7.5 billion as of October 20th, according to the data released on Thursday. 

    The overall liquid foreign reserves of the country now stand at $12.6 billion, while the commercial banks hold net foreign reserves of $5.1 billion.  

    The decrease in SBP’s reserves was attributed to debt repayments during the week that ended on October 20, 2023, leading to a decrease of $220 million and bringing the total to $7,494.2 million. 

    Last week saw a modest increase of $67 million in Pakistan’s central bank reserves. Notably, Pakistan’s central bank received a significant boost to its reserves in July of this year.  

    This boost was a result of the initial installment of approximately $1.2 billion from the International Monetary Fund (IMF), following the approval of a new $3-billion stand-by arrangement by the IMF. Additionally, Pakistan received inflows from Saudi Arabia and the UAE. 

    Nevertheless, the central bank’s reserves have come under pressure due to a combination of factors, including ongoing debt repayments, increased import payments after the easing of restrictions, and a lack of substantial new inflows. 

  • Here’s when PayPal and Stripe payment services will be available in Pakistan

    Here’s when PayPal and Stripe payment services will be available in Pakistan

    Dr Umar Saif, Pakistan’s interim Federal Minister for IT and Telecommunications, shared noteworthy developments on Wednesday regarding the imminent availability of PayPal and Stripe payment gateways within the country. Addressing the flourishing freelancing community, he drew attention to the current scarcity of financial tools to facilitate payments within this sector. 

    During these discussions with major industry players, including PayPal, Stripe, and Wise, a compelling case for Pakistan was presented, despite reservations, including those arising from the Financial Action Task Force (FATF). 

    Dr Saif expressed optimism, foreseeing promising updates on PayPal and Stripe services in the coming four to six weeks, heralding positive implications for the freelancer community. 

    Highlighting the substantial size and potential of Pakistan’s IT freelancing workforce, the country ranks as the world’s second-largest online workforce, boasting approximately 1.5 million active IT freelancers. Nonetheless, the sector’s growth has been stymied by infrastructure limitations. 

    To address these challenges, the E-Rozgar programme is set to offer interest-free loans to the private sector, with plans for establishing co-working spaces capable of accommodating 500,000 individuals. Dr Saif also revealed a collaborative initiative with the Higher Education Commission (HEC) to introduce standardised testing for IT graduates. 

    The significance of Pakistan’s IT sector cannot be understated, with around 19,000 companies contributing substantially to both employment and the national economy, boasting official exports worth $2.5 billion. 

    Another pertinent issue discussed by Dr Saif is the reluctance of some IT companies to maintain foreign exchange reserves and revenues abroad due to constraints on repatriating US dollars. Despite conservative estimates placing Pakistan’s IT exports at $4–4.5 billion, the reality is obscured by restrictions on US-dollar spending. 

    Fueled by cooperative efforts between the IT ministry and P@SHA, a positive development has emerged. IT companies can now retain 50 per cent of their revenue in US dollar accounts and receive corporate debit cards from banks, facilitating international payments without hindrance. 

    In addition, the State Bank of Pakistan (SBP) has played a crucial role in assisting IT exporters. The SBP recently increased the permissible retention limit for IT exporters, allowing them to hold 50 per cent of their export proceeds in Exporters’ Specialised Foreign Currency Accounts (ESFCAs) with the aim of bolstering IT and IT-enabled services exports. 

  • Pakistani rupee continues to lose against US dollar

    Pakistani rupee continues to lose against US dollar

    The Pakistani rupee experienced a 0.16 per cent depreciation against the US dollar in the inter-bank market on Wednesday, settling at 279.88, marking a decrease of Re0.45, as reported by the State Bank of Pakistan (SBP).

    The previous day, the rupee had depreciated by 0.11 per cent, closing at 279.43 against the US dollar. In a related development, the SBP anticipates an increase in remittances to Pakistan due to a notable rise in labour migration. 

    In fiscal years 2022 and 2023, Pakistan observed a significant surge in labour migration compared to the preceding two years, with around 0.8 million Pakistani workers registered through the Bureau of Emigration and Overseas Employment (BEOE) and Overseas Employment Corporation (OEC) during FY23.

    Internationally, the US dollar gained strength on Wednesday, supported by robust US economic data. Meanwhile, the euro faced challenges due to a dimming growth outlook in the Eurozone. US business output showed improvement in October, signalling a recovery from a five-month contraction, as reported on Tuesday. 

    In contrast, data from the same day indicated an unexpected downturn in business activity in the Eurozone. The euro, against the dollar, was up 0.05 per cent at $1.0595 but had declined by 0.75 per cent the previous day. This shift boosted the dollar index, which steadied at 106.23, moving away from a one-month low of 105.35 recorded in the previous session.

    Furthermore, oil prices remained above $88 on Wednesday, driven by concerns about escalating conflicts in the Middle East, which offset worries about reduced demand due to the gloomy economic prospects in Europe.

  • Positive change: Pakistan’s current account deficit shrinks to only $8 million

    Positive change: Pakistan’s current account deficit shrinks to only $8 million

    In September, Pakistan’s current account revealed a modest deficit of $8 million, as reported by the State Bank of Pakistan (SBP). 


    This marks a notable improvement from the $950 million deficit observed in July 2023, and a significant reduction compared to the $360 million deficit recorded in September of the previous year.

    To provide additional context, in July of this year, Pakistan faced a more substantial current account deficit of $809 million, the highest since October 2022, according to SBP data. 

    This figure, while lower than the $1.26 billion deficit in July 2022, sharply contrasts with June 2023 when the country enjoyed a surplus of $500 million in its current account.

    In terms of trade, central bank data shows that Pakistan’s exports of goods and services dipped to $2.654 billion in July 2023, down from $2.743 billion in July 2022. 

    Concurrently, total imports for July 2023 amounted to $5.03 billion, a decrease from the $6.07 billion recorded in the same period the previous year. In July of the preceding year, the trade balance in services registered a deficit of $32 million.

    Furthermore, there was a noticeable decline in worker remittances, with a year-on-year drop of 19.28 per cent. On a monthly basis, remittances decreased by 7.32 per cent to $2.027 billion.