Exchange rate weakness & KSE-100

[Farzooq]

Currency stability in FY13 despite BoP concerns…
Despite the precarious Balance of Payments (BoP) position in FY13 - which
depleted foreign exchange (FX) reserves from US$15.29bn to US$11.02bn - Pak
Rupee (PKR) exchange rate held up considerably well last year. The PKR lost
4.8% of its value against the US Dollar (USD) in FY13, a reasonable enough
performance as compared to previous 30-year average annual Rupee devaluation
of 7.2%. The same was despite the fact that in FY13, State Bank of Pakistan (SBP)
reserves dropped from US$10.80bn (almost 3-months import cover) to US$6.00bn
(about 6-weeks import cover), which ignited concerns of a bull-blown BoP crisis.

…but YTD FY14 depicts sharp deterioration
FY14-to-date, has been a different story altogether. While the risk of a BoP crisis
has been averted by Pakistan's re-entry into the IMF program (September 2013);
Pak Rupee exchange rate has deteriorated considerably post July 2013. YTD
FY14, the Pak Rupee has shed ~7.4% of its value vs. the greenback (Jan 2013-todate
Pak Rupee is down 9.4% vs. the USD). The same can partly be dubbed a late
‘catch-up’ play vis-à-vis the rout in regional FX markets (see table adjacent). That
said, recent Pak Rupee slide also ties up to the IMF’s requirement that the SBP (1)
purchase US$125mn from the FX spot market (prior action completed 5-days
before IMF’s Board Meeting on Sep 04, 2013); (2) limit interventions in the market
to those consistent with the program; & (3) increase its net foreign reserves by
US$347mn by Dec-2013. With limited US Dollar liquidity, speculative activity also
picked pace with USD crossing an all time high of Rs108/US$ in the open market.

Outlook and KSE implications
Recall last week we raised our Pak Rupee exchange rate outlook for June 2014 to
Rs107.5/US$ (from Rs105.5/US$), where we flagged that currency pressure is
likely to subside post 1QFY14. We maintain this view but believe a weak/uncertain
currency outlook is likely to play on equity investor minds, given risk of (1) macro
slippages – inflation, fiscal account; (2) lowering KSE attraction for foreign
investors, where FY14-to-date deval has already pared Dollar returns at the KSE to
2.5% (9.9% Rupee denominated return) and (3) lower corporate earnings. On the
latter, we see a relatively timid impact on KSE earnings where heavyweight sectors
are either positively correlated to or immune to PKR exchange rate weakness.

http://www.jsglobalonline.com/researchReports/M25SEPT13.pdf

[MZ]

Pict wil also benefit from exchange rate weekness coz its revenue is also dollar dominated.

SCBPL wil also have positive impact on its bottoline due to presence in international market.

[valor123]

weak rupee vs dollar, good for IPPs, good for banks as they are holding a lot, good for textiles and export oriented companies. bad for importers of raw materials etc like automobiles... wesay tou foreigners ke leay as a whole pakistani stock market attractive ho jani chaheay, har item 10% discount par mil raha hay after 10% of currency devaluation ....

[SBM]

its also good for fertilizers ...

[MZ]

Currency pressure to fuel CPI
Having registered at 8.55%YoY/1.16%MoM in Aug'13, we expect CPI to increase by 0.5%MoM which will lead Sep'13 CPI to clock in at 8.2%YoY. This is in contradiction to the SPI trend which suggests a 1.2%MoM decline. Sequential increase in CPI is expected on the back of increases in prices for wheat and petroleum products. This will lead 1QFY14 CPI to average 8.35%YoY. Going forward, inflationary pressures will likely continue particularly if the exchange rate continues to weaken. Regarding the latter, the PkR/US$ parity hit a record of 111 in intraday trade yesterday before recovering to 105.3 after the SBP intervened. This move by the SBP is a clear signal any speculative pressure on the PKR is unlikely to morph into a run. However a consistent tepid rate of depreciation is likely. That said, with reduced intervention capability in the immediate term, we do not rule out interim steps to stem the currency ala India e.g. through curbing non-essential imports such as gold. From an investment perspective, we believe sectors that can potentially outperform across the next few months include Banks, Textiles and Telecoms. Moreover, despite regulatory risk, Fertilizers can potentially stage a comeback if a weaker PkR discourages urea imports.
CPI Preview: After Aug'13 CPI clocked in at 8.55%YoY/1.16%MoM, we expect Sep'13 CPI to increase by 0.5%MoM to clock in at 8.2%YoY, bringing 1QFY14 average CPI to 8.35%YoY. This is despite SPI suggesting a steep 1.2%MoM decline where we point to higher prices for wheat (+4.1%MoM) and petroleum product prices (+3.5%MoM) as factors that may push sequential CPI higher. Going forward, we expect inflationary pressures to continue apace where our revised FY14 average CPI estimate is 10.2%. This is still below the central bank's expectation of FY14 CPI averaging 11%-12%YoY.
Currency Outlook: The PkR/US$ parity hit a record of 111 in intraday trade yesterday before recovering to 105.3. In this regard, the central bank reportedly resorted to intervention to the tune of US$25mn where going forward we understand that intervention will take place if currency volatility sharply increases. That said, with reduced intervention capability in the immediate term, at least until foreign flows materialize and the privatization process restarts, the PkR is likely to remain under pressure. As such, we do not rule out interim steps to stem the currency ala India e.g. through curbing non-essential imports such as gold. We maintain our end-Jun'14 PkR/US$ parity estimate of 107.64 but caution that any prolonged delay in flows may lead to +1sd deviation projection i.e. 112.48 becoming our base-case estimate.
Investment Perspective: Over the next 3-6 months, Pakistan's economy will likely face the double whammy of a weaker exchange rate and higher interest rates. Within this backdrop, we recommend a cautious stance where the KSE-100 Index may remain range-bound over the next few months. That said, selective sectors such as Banks (higher NIMs on interest rate), Textiles (higher export earnings on weaker PkR) and Telecoms (higher LDI earnings on weaker PkR) can potentially outperform. Moreover, despite regulatory risk (higher gas prices), Fertilizers can potentially stage a comeback if a weaker PkR discourages urea imports.

Akd

[MZ]

MoF refuses to explain causes behind PKR slide

The Finance Ministry on Friday refused to explain the causes that led to sharp depreciation of the rupee in recent days despite insistence by the parliamentarians. However, it firmly stated that it was fulfilling its responsibilities. Secretary Finance Dr Waqar Masood faced a plethora of questions by members during the Senate Standing Committee on Finance meeting chaired by Senator Nasreen Jalil over the rupee depreciation against the dollar. Masood responded that it would be inappropriate to discuss the issue at present.

"My response will remain the same no matter how many times you ask me about the depreciation of the rupee as this is inappropriate time," he said, adding that representatives of State Bank of Pakistan would be in front of the committee in a couple of days to comment more appropriately. The Secretary added that "our ears and eyes are open and we are fulfilling our responsibilities."

Senator Fateh Muhammad Hassani said there was growing perception in the market that the rupee depreciation was the outcome of 'agreement' with the International Monetary Fund (IMF) and if regulator had not intervened to arrest and stabilise the rupee, it would have touched Rs 120. Senator Usman Khan was of the view that the committee should not discuss the issue of depreciation of the local currency because it would affect the market.

The committee moved on to take up the formal agenda with a briefing by the Secretary Finance. He said the top management of the Securities and Exchange Commission of Pakistan (SECP) is in front of the committee with Acting Chairman. He said the permanent chairman of the SECP would be appointed soon. Waqar Masood said the SECP is an autonomous institution and is not subordinate to the Finance Ministry and managing daily affairs with complete freedom. About the appointments in public institutions, he said a new procedure has been developed for appointment of top management in public sector organisations in the light of the Supreme Court decision. He said a commission has already been set up for this purpose and an advertisement has been issued for appointment of Chairman Pakistan Telecommunication Authority (PTA). The committee members criticised the ad hoc policy of the government, saying majority of the organisations are being run through acting chairmen.

[SBM]

This newspaper, however, understands that a demand of 59 million dollars for crude oil purchased by Pakistan Refinery Limited was instrumental in unleashing a dollar frenzy as five banks wanting to cover the same deal sought 250 million dollars from the market thus putting unusual pressure on a thin market.

wtf ?
59 million dollars can bring the country to its knees ?

http://www.brecorder.com/money-a-banking/198:pakistan/1236865:exporters-decide-against-offloading-proceeds-at-rs-10580/?date=2013-10-01

[MZ]

Short-term pain to achieve long-term gain
 We recently attended a presentation and Q&A with a senior representative of the IMF. Some of the key topics touched upon regarding Pakistan were the 1) currency outlook, 2) changes in IMF program design, and 3) long-term outlook on Pakistan.

In terms of the currency outlook, the IMF believes that the current low level of import cover (1.5 months based on SBP reserves) has to be increased. Continued SBP intervention given the low base of reserves was untenable, and a one-off fundamental depreciation was needed to improve this situation. Currency volatility may continue for another month or two, after which it should stabilize.

Unlike previous IMF programs which were front-loaded in nature, this program has an equal disbursement post quarterly fund evaluation. The thought process behind this design is to ensure good behavior, given Pakistan’s mixed history of reform implementation.

The IMF remains bullish on the long-term potential of Pakistan’s economy; however some painful reforms have to administered in the short-term to address macro imbalances.

Falling import cover restricts SBP intervention; PKR should stabilize soon

We recently attended a presentation and Q&A with a senior representative of the IMF. Some of the key topics touched upon regarding Pakistan were the 1) currency outlook, 2) program design, and 3) long?term outlook on Pakistan. In terms of the currency outlook, the IMF believes that the current low level of import cover (1.5 months based on SBP reserves, 2.8 months on the basis of total reserves) has to be increased. Given the precarious reserve situation, continued SBP intervention to support the currency would not work. Despite a sharp fall in import cover over the last 9 months(fell from 4.5 months in Dec 2012 to 2.8 months currently), the currency had remained relatively stable before July 2013. As a result, a one?off fundamental depreciation was needed to address the situation.
KASB

[MZ]

Rupee sees a few days of stability

KARACHI: After a long spell of volatility, rupee showed stability during the week ended on Friday while demand for dollar remained high, with reserves falling on day-to-day basis.

The new government could hardly see a stable exchange rate since it came into power in the first week of June while the currency lost 12 per cent till Sept 26 against the dollar.

The same day the State Bank pumped about $60 million and the rupee appreciated by 5pc in a single day, creating a history for local currency appreciation.

Since then the stability prevailed in the inter-bank market.

Since Sept 26, rupee shed just 66 paisa against the dollar and was traded at Rs106.16 in the inter-bank market.

The situation is encouraging for importers and other stakeholders, but market experts have been showing doubts over sustainability of the exchange rate while the statement of the State Bank’s governor further strengthened their doubt.

The SBP governor said few days back that each day $25 million is being smuggled out.

The report fell like a bomb shell for stakeholders in the currency markets while currency dealers said the artificial arrangement for rupee stability would not last for a longer period.

However, the State Bank on Friday came out with a statement trying to mitigate the serious implications of the governor’s statement.

“This movement of currency is not a current phenomenon, but that it has been going on for years and that the SBP has been voicing concerns in the past to the relevant law enforcement authorities to arrest this smuggling across borders,” said the SBP.

Further, he said that the ‘amount is estimated to be up to $25m but that no one can quantify it precisely on any given day.’

The dealers said dollars are being invested in other countries by the rich Pakistanis.

To save their melting rupee savings, many have saved their dollars in bank lockers not taking the risk of being confiscated by the government; though the government cannot use these dollars held by the private commercial banks. Laws were introduced during General Musharraf era to protect the private dollar savings.

[MZ]

PKR depreciation tidings for different sectors
PKR depreciation against USD has always remained a major concern for different sectors for the economy. The recent and anticipated PKR/USD parity movement is expected to draw significant impact on various sectors’ profitability directly and/or indirectly. In today’s value Seeker we discuss the impact of PKR depreciation on local listed sectors.

With the prevailing uncertainty at the exchange rate front, we expect PKR to remain depressed in the remainder of FY14. PKR having already touched Rs111/USD in interbank market we see the same to remain shaky going forwad and a sizeable chunk of value to be shed by Jun-14. However, SBP intervention in the market is expected to provide some support to the local currency. We eye the upcoming IMF payments and oil import bill to exert further depreciation in PKR to in the remaining part of the year.

Cement Sector (Neutral)

With coal being a prime fuel for all cement players in the industry, depreciation in PKR increases the cost of production for the sector. However, the sector has the ability to pass on the impact of Rupee depreciation to the end-consumer leaving a neutral stance.

Fertilizer (Positive)

PKR depreciation keeps the imported fertilizers prices on higher side. Therefore, the widening gap between imported and local fertilizer prices providing an edge to fertilizer producers to pass on any incremental cost to consumers while maintaining their profit margins.

Textile (Positive)

Textile sector is one of the main beneficiaries of PKR fall, as most of the textile companies’ rely on exports. The expectation of massive depreciation in PKR against USD is anticipated to improve the profitability of this sector.

Automobile (Neutral)

Due to reliance on imported raw material, any upward trend in USD against PKR will potentially increase the cost of production thus reducing the profitability of car assemblers. However, passing on the additional cost to consumers, auto assemblers are anticipated to save their margins.

Power (Positive)

Profitability of IPPs is positively linked to PKR depreciation against USD as their tariff structure is indexed to PKR/USD parity. As per our estimates, 1% drop in PKR results in ~70bps increase in universe earnings (NCPL &NPL) keeping other variables constant. On valuation side, ~50bps rise in target price of universe stocks anticipated against 1% fall in PKR. Other macro variables, likely to influence IPPs include inflation and PIBs yields. Higher inflation ahead is expected to lead to earnings hike and higher valuation while rising PIB yields will negatively impact IPPs valuation going forward.

Banks (Neutral)

We expect PKR depreciation to be only slightly eventful for the banking sector with positivity flowing in from increased income from dealing in foreign currencies for banks. However given that the currency market seems more attractive as compared to the capital market till Dec-13, we see slight shift of investment in the former at the banks end therefore possibility of an increased income flow from the same. However given that SBP has been highly vigilant for the matter of controlling any unwanted speculation in currencies we see banks exposure in the same to be restricted going forward therefore slightly offsetting the positivity expected.
InvestCap

[SBM]

Act now to avert Balance of Payments crisis

October 14, 2013 BR Research0 CommentsE-mailPrintPDF
The State Bank of Pakistan is currently faced with a tough choice between maintaining foreign exchange reserves and stabilizing the currency market.

Boosting reserves may seem to be the obvious choice, given the countries frequent BoP-led crises, but volatility in the currency markets has grabbed the attention of the central bank in recent weeks. Former policy makers have expressed reservations over SBPs recent moves to contain the decline of the local currency as they contend that trend will persevere regardless of the move.

After the rupee crossed Rs110/USD intraday on September 26, the central bank intervened to bring it back below Rs106/USD by the end of that day. Since then SBP has been pushing hard to stabilize the currency at the cost of depleting reserves.

During the week Sep27-Oct4, net reserves with SBP fell by a whopping $650 million, down to just $3,954 million, which is less than what is needed to cover a months imports. On the other hand, the reserves with scheduled banks dropped by $147 million. Simply put, import compression is very much on the cards.

Repayments to the IMF during the same week were less than $200 million and no other major payments were due in that time. This highlights SBPs desperation to stabilize the currency market. The strategy is not sustainable by any means, given the thin foreign exchange reserves. Sooner or later the rupee will adjust against the greenback.

The government is eyeing the materialization of CSF funds ($300 million were due in the last quarter) and other bilateral and multilateral inflows. But most observers consider these expectations to be too rosy to bank on.

Alarm bells can ring anytime as SBP is depending on the commercial banks for keeping sanity in the currency market. Some measures of controlling capital are in minds of those who are at the helm of the Ministry of Finance and SBP. Ishaq Dar deems that the rupee is undervalued and should revert to Rs100 per USD while the Governor, SBP is nodding to his bosss wish. The scenario is reminiscent of the fiasco that is remembered by all from the previous Nawaz Sharif administration in 1998.

Freezing of FE25 accounts is an option that cannot be ruled out. According to sources privy to the central bank, the phenomenon is already happening through the back door as SBP is asking commercial banks to keep their foreign currency deposits with the apex regulator.

What if a saver goes to his bank to withdraw foreign currency for personal use? Will his money be released promptly? These are the questions hovering in the minds of those who have deposited their savings in foreign currencies.

In 1997, during the East Asian crisis, the condition of Indonesia was not much different from what is happening in Pakistan today. Policy makers ought to take some immediate measures to curb imports of non-essential items to avert the looming crisis. Import compression is the only option, as aptly said by Dr Pasha. All SROs on imports have to be revisited and an urgent need is to impose import duties and to do away with concessions on imports of non-essential items and even some raw materials.

[MZ]

SBP to likely buy $100m to support forex reserves

[MZ]

After remaining stable, rupee starts losing value again

[MZ]

THE RUPEE: dollar tracks global surge

The dollar, in line with the international market, managed to hold its command over the rupee's weakness on the local market on Friday, dealers said. The dollar is still on surge globally and locally as people were trying to keep dollars as a save haven or for their protection; this factor is causing an erosion in the value of the rupee, some experts said.

OPEN MARKET RATES: The rupee shed 10-paisa against the dollar for buying and selling at Rs 108.10 and Rs 108.30 respectively, they added. The rupee, however, gained Rs 1.05 in terms of the euro for buying and selling at Rs 143.75 and Rs 144.00 respectively, they said.

INTERBANK MARKET RATES: The rupee shed six-paisa against the dollar for buying at Rs 107.38 and it also shed five-paisa for selling at Rs 107.40, they said.

In the final Asian trade, the dollar remained buoyant in Asian trade after the European Central Bank's surprise interest rate cut sent the euro to near eight-week lows, but its gains were tempered ahead of the key US payrolls report later. The dollar was trading against the Indian rupee at RS 62.74, the greenback was at 3.1830 in terms of the Malaysian ringgit and the US currency was at 6.0920 in relation to the Chinese yuan.

========================
Open Bid       Rs 108.10
Open Offer     Rs 108.30
========================

[Valueestimator]

good for textile and very good for E & P sector.

1 rupee appreciation in dollar means roughly 1.5 per share of additional income assuming all other things remaining the same.

[tariqhafeez]

Currency devaluation is also good for IPPs.

[MZ]

SBP, FIA move to curb dollar flight

 The State Bank of Pakistan and the Federal Investigation Agency will sign a memorandum of understanding next week to curb smuggling of foreign currencies from the country.

“The MoU will allow our staff to be posted at Karachi, Lahore, Islamabad and Peshawar airports,” SBP Governor Yaseen Anwar told Dawn.

The arrangement stipulates that first SBP officials will identify ‘dollar carriers’, the FIA will check their luggage and then arrest them, if needed.

The carriers (popularly known as ‘khepias’) carry suitcases stuffed with dollars and they can be picked out easily from other passengers, but so far the FIA and the Customs department have not taken any action against them.

The limit for physically taking dollars out of the country through legal means is $10,000.

The country has been facing a significant decline in foreign currency reserves and the State Bank governor had said recently that smuggling could be up to 25 million dollars during a certain week.

A PIA airhostess said some passengers carried a huge baggage and they even purchased additional tickets for it, but it was not “our job to check them”.

“There is an illegal outflow from the country, but that does not constitute a major chunk of declining foreign exchange reserves,” a banker told Dawn. “The poor inflow of dollars is the real problem.”

[MZ]

THE RUPEE: may cross 109 mark


The rupee is likely to breach the barrier of Rs 109 versus the dollar on the money market in the coming days, dealers said on Tuesday. Strong dollar buying may continue and it is most probably that it may crossed the barrier of Rs 109 in days to come, money experts said.

OPEN MARKET RATES: The rupee continued weakness against the dollar, losing more 30 paisa for buying and selling at Rs 108.50 and Rs 108.70, they added. The rupee, however, rose the same amount versus the euro for buying and selling at Rs 143.50 and Rs 143.75, they said.

INTERBANK MARKET RATES: The rupee shed 11 paisa against the dollar for buying at Rs 107.53 and it also depreciated by 10 paisa for selling at Rs 107.55, they said. In the second Asian trade, the euro clung onto modest gains early in Asia on Tuesday after a lacklustre overnight session that saw investors trim bearish positions in the common currency following a heavy sell-off last week.

Traders said an absence of fresh drivers had prompted the market to lock in profits, a move that helped the euro drift up to $1.3405 from Monday's low of $1.3345, pulling away from a two-month trough of $1.3295 plumbed Thursday. The dollar was trading against the Indian rupee at 63.24, the greenback was at 3.2010 in terms of the Malaysian ringgit and the US currency was at 6.091 against the Chinese yuan. Interbank buy/sell rates for the taka against the dollar on Tuesday. 77.75-77.7525 (77.75-77.75). Call Money Rates: 06.00-08.00 percent (*previous 05.75-08.00 percent).

========================
Open Bid       Rs 108.50
Open Offer     Rs 108.70
========================

[MZ]

THE RUPEE: modest recovery


The rupee recovered modestly against the dollar and the euro on the currency market on Saturday, dealers said. The rupee managed to gain 25 paisa in terms of the dollar for buying and selling at Rs 109.50 and at Rs 109.70, they added. The rupee also picked up the same amount in terms of the euro for buying and selling at Rs 147.25 and Rs 147.50, they said.

OPEN MARKET RATES: At the weekend, the euro traded near a five-year peak against the yen and a one-month high against the dollar after eurozone economic data dented speculation about further monetary easing by the European Central Bank. Annual eurozone consumer price inflation rose by 0.9 percent in November, slightly more than economists had predicted, while further data revealed the first fall in eurozone unemployment in almost three years.
========================
Open Bid       Rs 109.50
Open Offer     Rs 109.70
========================

RUPEE IN LAHORE: The rupee continued its fall against both the major currencies ie, US dollar and pound sterling on the local currency market on Saturday.

According to the currency dealers, the dollar's demand continues for another day that helped its appreciation against the Pak rupee. The dollar was closed at Rs 109.90 and Rs 110.10 on buying and selling sides against Rs 109.80 and Rs 110.00 of Friday, respectively.

Similarly, the rupee was depreciated against the pound sterling whose buying and selling rates were further improved from previous closing of Rs 177.50 and Rs 177.75 to Rs 178.00 and Rs 178.50, respectively, the dealers said.

RUPEE IN ISLAMABAD AND RAWALPINDI: The rupee-dollar parity remained unchanged at the open currency markets of Islamabad and Rawalpindi here on Saturday.

The dollar opened at Rs 109 (buying) and selling Rs 109.10 (selling) against last rate. It did not observe further change in the second session and closed at Rs 109 (buying) and selling Rs 109.10 (selling).

Pound Sterling opened at Rs 174 (buying) and Rs 174.50 (selling) against same last rate. It closed at the same rate without further change by the end of evening session.

[MZ]

Since 2008 till date : IMF’s loan initiative drags rupee 72% down

* Rupee closes at Rs 109.75 for buying in the open market while it was Rs 64 for buying in March 2008

* Forex reserves with SBP around $3.46bn not enough to meet one month’s import bill payments

By Razi Syed

KARACHI: The rupee has been receiving heavy beating at the hands of the dollar since the government started taking loan from the International Monetary Fund (IMF) since 2008.

The government of Pakistan took $7.8 billion in instalments under the IMF’s Stand-by Arrangement facility in March 2008 and in order to repay that loan and meet the import bill payments on time is in another arrangement of $6.7 billion with the IMF under Extended Fund Facility (EFF).

The dollar has since then gained 71.48 percent against the rupee as it it’s currently standing at Rs 109.75 for buying in the open market as against Rs 64 for buying in March 2008.

The country has hardly one-month import bill payments, as the foreign exchange reserves with the State Bank of Pakistan (SBP) are left at around $3.46 billion, which is nearly 20 percent less.

The local currency’s continued downward rally against the dollar is greatly contributed to delay in the payment of IMF’s second tranche of $550 million under EFF, said currency experts.

The private sector exchange companies also blamed commercial banks for not supplying them adequate dollar to meet their public demand, which in result enhanced the dollar value against the rupee in the open market transaction.

Exchange Companies Association Chairman Malik Bostan said this situation has already been forwarded to the Ministry of Finance.

“The officials of the ministry assured us that the dollar supply condition would improve by the Monday (tomorrow),” he claimed.

It seems the official open market rate of rupee against the dollar would come between Rs 112 and Rs 115 in the next couple of months, opined currency experts.

Other major reason was higher demand for greenback by oil purchase payment and import bill payments, which stood around $235 million.

The petroleum products and edible oil imports become costlier whenever the rupee depreciates besides the imports of material for value addition make an impact on cost of production of major sectors like textile, leather and surgical goods.

Usually in every November-December the dollar demand increases by 4.0 percent as compared to other months on back of more import of edible oil.

Pakistan would possibly face a 5.2 percent increase in value of IMF loans repayment due to dollar-rupee parity in more than 30 months till 2015.

Fazal Ahmad a currency expert in Houston said a 67 percent-plus depreciation of the rupee against the dollar has been noticed.

The rupee is also under pressure due to the fact that SBP has not been taking interest in the foreign exchange market on the direction of the IMF, the exchange rate mechanism now depends on supply and demand position.

The government was deliberately delaying floating of international bond while SBP was not purchasing dollar from commercial banks in order to fortify its foreign exchange reserve position, he added.

A possible solution is for the government to securitise monetary remittances from Pakistanis working abroad. That could shore up the government’s fiscal position, enabling it to halt the rupee’s slide and restore confidence in the currency.

The real test will be in the March and June 14 quantitative targets, in which both the SBP’s foreign exchange reserves target and the government borrowing ceiling from SBP are quite ambitious.