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‘Unbridled’ dollar closes at historic high of Rs262.60 in interbank

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'Unbridled' dollar closes at historic high of Rs262.60 in interbank

The US dollar continued its upward momentum in the local currency markets on Friday as the greeback touched Rs262.60 in the interbank and Rs265 in the open market, 

The dollar surged by Rs7.17 to reach Rs262.60 in the interbank trade, the State Bank of Pakistan (SBP). The local currency depreciated 2.73 against the greenback. The PKR was closed at Rs255.43 on Thursday. 

Economic experts and business community fear that extraordinary weakening of the Pakisni rupee since yesterday will not only trigger inflationary pressures in the consumer markets, but also multiply the cost of loans. 

There were reports that the weakening of the local currency has jacked up the cost of loans up to Rs3,950 billion.

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The dollar has gained Rs30.11 in the interbank market since Thursday as forex companies removed a cap on the exchange rate.

According to Reuters, The Pakistani rupee fell 9.6% against the dollar on Thursday, central bank data showed – the biggest one-day drop in over two decades – in a slump that may persuade the International Monetary Fund to resume lending to the country.

The drop comes a day after foreign exchange companies removed a cap on the exchange rate, a key demand of the IMF as part of a programme of economic reforms it has agreed on with the cash-strapped South Asian nation.

The currency s official value closed at 255.4 rupees against the dollar versus 230.9 on Wednesday, the central bank said.

Facing an acute balance of payments crisis, Pakistan is desperate to secure external financing, with less than three weeks  worth of import cover in its foreign exchange reserves, which fell $923 million to $3.68 billion in the latest data.

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Pakistan secured a $6 billion IMF bailout in 2019. It was topped up with another $1 billion last year to help the country following devastating floods, but the IMF then suspended disbursements in November due to Pakistan s failure to make more progress on fiscal consolidation.

The lender announced on Thursday that it was sending a mission to the country at the end of January to discuss resuming the programme.

Aside from wanting the government to take fiscal measures, the IMF is pushing for it to move to a market-determined exchange rate regime, which the IMF highlighted in its statement on Thursday.

— Artificial distrotions —

The foreign exchange companies said on Wednesday that they had removed the cap for the sake of the country, because it was causing “artificial” distortions for the economy.

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Wednesday s move by foreign currency dealers, whose open market rates are different from the rate notified by the central bank, had a cascade effect on official exchange rates on Thursday.

The drop in the official rate was the biggest since 1999 in both absolute and percentage terms, according to JS Global, a Pakistani brokerage house.

In the open market, the rupee weakened from 243 rupees to the dollar to 262, a drop of about 7%, having lost 1.2% the previous day, according to the Exchange Companies Association of Pakistan (ECAP) trade data.

“We requested the central bank to increase the interbank (rate) to help combat the black market,” ECAP President Malik Bostan told Reuters.

The State Bank of Pakistan (SBP) and the finance ministry did not respond to a Reuters request for comment.

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Attempts by Finance Minister Ishaq Dar to defend the rupee since his appointment in September, including reported currency market interventions, had run counter to the IMF s advice.

— Positive response — 

The Pakistan Stock Exchange, however, reacted positively to the rupee s fall, with the KSE 100 index shooting up more than 1,000 points, or 2.5%.

“The depreciation in the rupee takes away some uncertainty regarding the economic roadmap ahead and resumption of the IMF programme, which the market is responding positively to,” Tahir Abbass, Head of Research at Arif Habib Limited, said.

Topline Securities, a Karachi-based brokerage house, said the sharp fall in foreign exchange reserves from $8 billion in September to $4.6 billion as of Jan. 13 led to a widening in the spread between the official and open market rates, and created a black market for dollars due to the low supply.

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The sudden drop in rates hit banks hard. According to two officials in commercial banks operating in Pakistan, banks that had earlier borrowed at 230 rupees to the dollar to make payments by running open positions now have to settle payments at a rate of 250 rupees.

The officials told Reuters on condition of anonymity that banks that were hit the hardest are those that did not have adequate dollar inflows.

— Decades-high inflation —

While the move increases the chances of a restart in IMF funding, Pakistan is also reeling from decades-high inflation, which economists fear will now get worse. Most of Pakistan s critical imports, including fuel, are paid for in dollars.

“It will give a significant impetus to already elevated price pressures in the economy,” said Sakib Sherani, a Pakistani macroeconomist, adding that consumer price index (CPI) numbers are heading to levels previously unseen in the country.

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In the first half of the current financial year, which ends in June, average inflation has been 25%. The central bank is also tightening monetary policy sharply, with key rates also at decades-high levels and growth having come to a grinding halt.

The ensuing economic crisis will also pile political pressure on the government, with former prime minister Imran Khan demanding a snap general election.

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Over 70pc global workforce faces climate change risks: ILO

Over 70pc global workforce faces climate change risks: ILO

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Over 70pc global workforce faces climate change risks: ILO

More than 70 per cent of the global workforce is exposed to risks linked to climate change that cause hundreds of thousands of deaths each year, the International Labour Organisation (ILO) said on Monday, adding governments would need to act as the numbers rise.

Workers, especially the world’s poorest, are more vulnerable than the general population to the dangers of climate extremes [extreme weather events] such as heatwaves, droughts, wildfires, and hurricanes because they are often the first exposed, or exposed for longer periods and at greater intensity.

Read more: Heat, disease, air pollution: How climate change impacts health

As climate change accelerates, governments and employers are struggling to protect employees, the ILO said in a report.

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“A staggering number of workers are already being exposed to climate change-related hazards in the workplace, and these figures are only likely to get worse,” the report entitled “Ensuring safety and health at work in a changing climate” said in its conclusions.

“As (the hazards) evolve and intensify, it will be necessary to re-evaluate existing legislation or create new regulations and guidance.”

Some countries have improved heat protections for workers, such as Qatar, whose policies came under scrutiny ahead of the 2022 soccer World Cup.

However, rules to govern other dangers like growing pesticide use for agricultural workers are less common.

Read more more: Climate change affecting women, especially those working in agri sector, disproportionally in countries like Pakistan

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“We do have some (countries) that already limit exposure to high temperatures and also limit exposure to air pollution, but we rarely have occupational exposure limits set for the other hazards,” said Manal Azzi, ILO Senior Specialist on occupational safety and health.

Read more: Lahore and Chingchi effects: Noise at workplace has serious effects on your health

The share of global workers exposed to the most widespread hazard, rising temperatures, has risen by around 5 percentage points over the last two decades to 70.9 per cent, the report said,

Other climate dangers often co-exist, creating a “cocktail of hazards,” the report said, with UV radiation and air pollution each affecting 1.6 billion people.

Read more: Climate change hits Asia hardest, below-normal rains in Hindu Kush range of Pakistan: UN

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Because a worker is likely to be exposed to multiple dangers at once, an ILO spokesperson said it was impossible to calculate exactly what portion of the 3.4 billion global workforce was at risk.

Climate-related hazards are being linked to a cancer, kidney dysfunction, and respiratory illnesses, leading to deaths or debilitating chronic conditions or disabilities.

Air pollution is the most deadly risk, causing some 860,000 work-related deaths among outdoor workers annually, the ILO report said. Excessive heat causes 18,970 occupational deaths each year and UV radiation kills 18,960 through non melanoma skin cancer, it said.

Read more: Pakistan among six nations bearing the brunt of pollution health burden

“The greatest impacts will be felt by the working poor, those working in the informal economy, seasonal workers and workers in micro and small enterprises,” the report said.

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In some cases, the very technologies meant to slow climate change like solar panels and lithium-ion batteries for electric vehicles can end up producing new dangers since they contain toxic chemicals, it said.

The ILO plans a major meeting in 2025 of government, employer and worker representatives to provide policy guidance on climate hazards.

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India sugar demand surges in heatwave and election season

India sugar demand surges in heatwave and election season

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India sugar demand surges in heatwave and election season

 Indian sugar consumption this year is poised to hit a record high as demand during the peak summer season gets a boost from heatwaves and the mobilisation of millions for elections in the scorching temperatures.

Higher consumption would lift local prices and boost margins of sugar producers such as Balrampur Chini, Shree Renuka Sugars, Bajaj Hindusthan and Dwarikesh Sugar, and help them in making cane payments on time to farmers.

Consumption of cold drinks and ice cream, and as a result demand for sugar, rises in India during the summer months roughly from mid-March to mid-June.

But this year demand is above average as heatwaves and election rallies boost consumption of ice-cream and soft drinks, said Avantika Saraogi, executive director at Balrampur Chini Mills.

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Maximum temperatures in many parts of India have risen above 40 degrees Celsius, and the weather department has forecasted that the country is likely to experience more heatwave days than normal between April and June.

Read more: India braces for heatwaves with impact seen on inflation, election 

During the harsh summer, India is hosting the world’s largest election, in which nearly a billion people will be eligible to vote.

Political parties hold huge rallies, some attended by as many as 200,000 people, undeterred by the sweltering heat, which only intensifies as the campaign picks up pace.

Earlier this week, following an energetic election rally at Pune in the scorching afternoon sun, dedicated workers of a political party flocked to a nearby restaurant to quench their thirst with refreshing soft drinks.

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“It’s sweltering out there. We need something icy to keep us going in this heat,” said Mahesh Pawar, one of the workers.

“We’re grateful to our leader for providing us with these refreshing beverages to keep our spirits high.”

SWEET SUMMER

Indian sugar consumption in during April-June could rise to 7.5 million tons, up 5 per cent from a year ago, said a Mumbai-based dealer with a global trade house.

This year’s unusual rise in consumption is temporary, with demand growth returning to a normal pace next year, said Prakash Naiknavare, managing director of the National Federation of Cooperative Sugar Factories Ltd.

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“But right now the industry is experiencing an unusual boost in demand. This is expected to lift total consumption this year to a record 29 million metric tons,” Naiknavare said.

India’s sugar consumption in the 2022-23 marketing year, which ended on Sept 30, stood at 27.85 million tons.

Higher demand has already begun lifting sugar prices, which have risen nearly 3pc in a fortnight.

The government has allocated a higher quota for April compared to last year, but prices are still rising due to robust demand from bulk consumers, said Ashok Jain, president of the Bombay Sugar Merchants Association.

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Refineries against fuel price deregulation which Ogra says will boost competition

Refineries against fuel price deregulation which Ogra says will boost competition

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Refineries against fuel price deregulation which Ogra says will boost competition

Pakistan’s plans to deregulate fuel prices could lead refiners to halt planned upgrades worth up to $6 billion and force some refineries to close, some of the country’s top refiners said in a letter to the country’s oil regulator.

Looking to drive down prices for consumers, the South Asian nation’s Oil & Gas Regulatory Authority (Ogra) has proposed that oil marketers and refineries be allowed to set fuel prices, instead of the government setting prices.

As part of the change, Ogra proposed scrapping or reviewing a rule that requires fuel buyers to purchase supply from local refineries, another issue the refiners said could result in “disastrous consequences”.

The refiners – state-run Pakistan Refinery and private domestic refiners Pak Arab Refinery, Attock Refinery, Cnergyico and National Refinery – said they were already struggling to operate near full capacity, and asked that they be consulted before the implementation of “irrational recommendations”.

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“The refining sector requires Ogra support through pragmatic and supportive measures, rather than suggesting ways that if implemented would result in their permanent closure,” the refiners told Ogra on Monday in a letter, which was reviewed by Reuters.

The deregulation was aimed at boosting competition and protecting the public interest, Ogra told Reuters in a statement on Tuesday, but did not respond to specific questions on the letter from the refiners. However, it said in an April 17 presentation reviewed by Reuters the potential impact of deregulation on refinery upgrades had to be assessed carefully, calling it a challenge.

“The refineries upgradation will bring in investment of $5-6 billion and not only result in cleaner environment-friendly fuels but also result in savings of precious foreign exchange of the country,” the refiners wrote in the letter to Ogra. 

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