Business

High demand propels US dollar against Pakistan rupee, Japan yen

Published

6 months ago

November 13, 2023

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High demand propels US dollar against Pakistan rupee, Japan yen

The US dollar started the new business week on Monday from where it had left during the last session, with a Rs1 gain in open market exchange rate, as the rupee seems unable to halt the latest slide which is erasing the gains it had made after reaching a record low against the world’s dominant currency.

Meanwhile, a similar trend was witnessed against the Japanese yen as the dollar climbed to its highest levels in over a year, supported by a scaling back of expectations for US Federal Reserve interest rate cuts next year.

The yen is considered a safe haven currency like two other peers – the US dollar and the Swiss franc.

As the market approached the midday trading in Pakistan, the dollar was available for Rs289 amid a high demand, which is also being attributed to market manipulation, as the investors are opting for the safe haven currency amid the ongoing International Monetary Fund (IMF) of the $3 billion stand-by arrangement.

On the other hand, the dollar’s official exchange rate in interbank intraday trading had so far increased by 87 paisa, which means the greenback was available for Rs287.90 against the previous closing of Rs287.03 on last Friday.

The weakening rupee coincides with the history-making bullish trend being witnessed in the stock exchange where the KSE-100 has now shattered another record by crossing the 56,000 ceiling.

Last month, the State Bank of Pakistan’s Monetary Policy Committee had decided to maintain the interest rates to the current record-high level of 22pc despite the signs of an easing inflation, making many in the market to expect a rate cut.

The rupee is under pressure amid a high demand – described by many as a return of market speculation after the short-lived government crackdown – as the IMF is pressing ahead with its demand to meet all the conditions required under the $3 billion stand-by arrangement.

Hence, this scenario is creating uncertainty as experts believe that even the release of the second tranche after a successful first review won’t improve dollar supply.

The IMF has been adamant to stick with the criterion of market determining the currency exchange rate, thus closing the door for any government intervention to boost the local currency.

YEN ON A SLIDE

Japanese authorities were unusually quiet as the yen, down almost 14pc this year, weakened again although markets remained alert to potential intervention to shore up the Japanese currency.

Markets also digested news late on Friday that Moody’s has lowered its outlook for the US credit rating to “negative,” while focus turned to Tuesday’s US consumer price index.

Fed policymakers, including Chair Jerome Powell, last week suggested the battle against inflation may not be over yet, prompting a scaling back of market rate cut bets that pushed up short-dated Treasury yields and supported the greenback.

The dollar on Monday rose to 151.85 yen, its highest level since October 2022. It was last up 0.2pc, having last week rallied around 1.4pc in the biggest weekly jump against the yen in three months.

The dollar index, measuring the greenback’s value against other major currencies, was a touch firmer around 105.80 and holding on to most of last week’s gains.

The euro was hovering around $1.0693, broadly steady against the dollar.

Elsewhere, sterling stood firm at $1.2231 ahead of UK average weekly earnings data on Tuesday and a CPI reading on Wednesday, after GDP data last week showed the economy failed to grow.

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Business

Chinese firm aims to expand investments in Pakistan, shows interest in mining sector

Published

2 days ago

May 17, 2024

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Chinese firm aims to expand investments in Pakistan, shows interest in mining sector

A notable Chinese company has expressed keen interest in expanding its investment in Pakistan, in yet another sign of investor confidence boost in the leadership of Prime Minister Shehbaz Sharif.

A delegation from Chinese firm MCC Tongsin Resources led by its Chairman Wang Jaichen called on PM Shehbaz here on Friday.

The premier invited the Chinese company to invest in Pakistan’s mining sector and manufacturing of export goods.

Shehbaz assured the delegation that his government would extend all-out facilitation to the company from minerals exploration and processing to the export of goods.

The PM instructed the relevant federal ministers and officers to continue consultation with the Chinese firm, taking the Balochistan chief minister, provincial departments and stakeholders on board.

The delegates reposed trust in PM Shehbaz’s leadership, and expressed keen interest in enhancing their investment in Pakistan’s mining and minerals sectors.

The delegation briefed Prime Minister Shehbaz about the construction of a mineral park in Pakistan and their future investment plans.

The premier welcomed the Chinese firm and highlighted the priority steps by his government to promote foreign investment in Pakistan.

He said that being a time-tested friend, China supported Pakistan in every difficult hour for which the Pakistani nation was grateful to the leadership and people of China.

Federal ministers Ahad Khan Cheema, Dr Musaddik Malik, Rana Tanveer Hussain, Jam Kamal Khan and relevant senior officers attended the meeting.

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Business

Govt jacks up power price by Rs1.47 per unit

Published

2 days ago

May 17, 2024

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Govt jacks up power price by Rs1.47 per unit

The government on Friday increased the electricity tariff by Rs1.47 per unit.

According to Nepra sources, the collection from consumers will take place in August, September, and October.

The electricity companies had requested the funds as part of the third quarter adjustment for 2023-2024, seeking Rs 31.34 billion under capacity charges.

Sources said that Rs5.57 billion were requested for operation and maintenance costs, and Rs12.38 billion were requested for the transmission and distribution impact under monthly fuel cost adjustment.

Previously, Nepra had completed the hearing on the electricity companies’ request under the quarterly adjustment.

Nepra approved the Power Division’s request, allowing an increase of Rs 1.45 per unit in electricity prices.

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Business

Hong Kong allows China’s digital yuan to be used in local shops

Published

2 days ago

May 17, 2024

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Hong Kong allows China's digital yuan to be used in local shops

Hong Kong will allow mainland China’s pilot digital currency to be used in shops in the city, the head of its de facto central bank said on Friday, marking a step forward for Beijing’s efforts to internationalise the yuan amid rising geopolitical tensions.

The programme, backed by Beijing, will allow mainland Chinese and Hong Kong residents to open digital yuan wallets via a mobile app developed by China’s central bank and will permit them to make payments in retail shops and some online stores in Hong Kong and in mainland China.

Transactions using e-CNY, predominantly for domestic retail payments in China, hit 1.8 trillion yuan ($249.27 billion) as of end of June 2023, with 120 million digital wallets opened, according to the latest disclosure from China’s central bank.

Using the wallet, users can make payments at over 10 million merchants in 17 provinces and cities in the mainland.

Each wallet used in the city will be subject to a balance limit of 10,000 yuan, with single transactions and daily payments capped at 2,000 yuan and 5,000 yuan, respectively, officials from the Hong Kong Monetary Authority said.

Peer-to-peer transfers will not be allowed at the moment, according to the HKMA.

“By expanding the e-CNY pilot in Hong Kong .. users may now top up their wallets anytime, anywhere without having to open a mainland bank account, thereby facilitating merchant payments in the mainland by Hong Kong residents,” HKMA Chief Eddie Yue said.

Currently, users of other digital yuan wallets such as those operated by Ant Group and Tencent can make payments in the city.

Industrial and Commercial Bank of China, Bank of China Ltd, China Construction Bank Corp and Bank of Communications Co have been selected as e-CNY wallet operators.

The yuan’s use in global finance remains low, though it has shown steady increases.

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