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The Market ! => Pak Equities => Topic started by: Farzooq on September 25, 2013, 11:39:34 PM

Title: Exchange rate weakness & KSE-100
Post by: Farzooq on September 25, 2013, 11:39:34 PM
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
Title: Re: Exchange rate weakness & KSE-100
Post by: MZ on September 26, 2013, 12:02:16 AM
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.
Title: Re: Exchange rate weakness & KSE-100
Post by: valor123 on September 26, 2013, 09:21:37 AM
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 ....
Title: Re: Exchange rate weakness & KSE-100
Post by: SBM on September 26, 2013, 11:33:29 AM
its also good for fertilizers ...
Title: Re: Exchange rate weakness & KSE-100
Post by: MZ on September 27, 2013, 02:19:00 PM
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
Title: Re: Exchange rate weakness & KSE-100
Post by: MZ on September 28, 2013, 09:59:19 AM
MoF refuses to explain causes behind PKR slide (http://www.brecorder.com/top-stories/0:/1235290:mof-refuses-to-explain-causes-behind-pkr-slide/?date=2013-09-28)

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.
Title: Re: Exchange rate weakness & KSE-100
Post by: SBM on October 01, 2013, 07:03:58 AM
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
Title: Re: Exchange rate weakness & KSE-100
Post by: MZ on October 02, 2013, 10:12:04 PM

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
Title: Re: Exchange rate weakness & KSE-100
Post by: MZ on October 05, 2013, 12:23:17 PM
Rupee sees a few days of stability (http://www.dawn.com/news/1047539/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.
Title: Re: Exchange rate weakness & KSE-100
Post by: MZ on October 09, 2013, 03:34:42 PM
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
Title: Re: Exchange rate weakness & KSE-100
Post by: SBM on October 16, 2013, 06:36:24 PM
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.
Title: Re: Exchange rate weakness & KSE-100
Post by: MZ on October 31, 2013, 11:02:58 AM
SBP to likely buy $100m to support forex reserves (http://www.dailytimes.com.pk/default.asp?page=2013\10\31\story_31-10-2013_pg5_1)
Title: Re: Exchange rate weakness & KSE-100
Post by: MZ on November 06, 2013, 09:57:23 PM
After remaining stable, rupee starts losing value again (http://tribune.com.pk/story/627639/after-remaining-stable-rupee-starts-losing-value-again/)
Title: Re: Exchange rate weakness & KSE-100
Post by: MZ on November 09, 2013, 01:05:17 PM
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.

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Open Bid       Rs 108.10
Open Offer     Rs 108.30
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Title: Re: Exchange rate weakness & KSE-100
Post by: Valueestimator on November 09, 2013, 09:45:45 PM
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.
Title: Re: Exchange rate weakness & KSE-100
Post by: tariqhafeez on November 09, 2013, 10:04:54 PM
Currency devaluation is also good for IPPs.
Title: Re: Exchange rate weakness & KSE-100
Post by: MZ on November 10, 2013, 01:34:55 PM
SBP, FIA move to curb dollar flight (http://www.dawn.com/news/1055294/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.”
Title: Re: Exchange rate weakness & KSE-100
Post by: MZ on November 13, 2013, 06:12:18 AM
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).

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Open Bid       Rs 108.50
Open Offer     Rs 108.70
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Title: Re: Exchange rate weakness & KSE-100
Post by: MZ on December 01, 2013, 11:46:18 AM
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.
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Open Bid       Rs 109.50
Open Offer     Rs 109.70
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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.
Title: Re: Exchange rate weakness & KSE-100
Post by: MZ on December 01, 2013, 11:54:21 AM
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.
Title: Re: Exchange rate weakness & KSE-100
Post by: SBM on December 10, 2013, 11:46:28 AM
` Ministry of Finance meeting with Banks to discuss ailing PKR today               (Dawn)  

Ministry of  Finance  is meeting banks to find ways for bringing back the PKR below PRs100

against the dollar and breaking the so?called  cartel of banks benefitting from the dollar?led 

crisis.  Finance Minister recently forced banks to start supplying dollars  in the open market 

which produced positive results as the greenback which touched PRs110 last week, was traded 

at 107.70/90, lower than the interbank rate of PRs108.10. Foreign exchange reserves of the SBP 

are at the lowest level of US$3bn, expected inflows of US$1.3bn could change the situation. 

US$500mn  is  expected from IFC, US$100mn from IDP,  around US$150mn from  commercial 

banks and US$550mn (2nd tranche) from IMF by third week.
Title: Re: Exchange rate weakness & KSE-100
Post by: MZ on December 10, 2013, 05:45:36 PM
(http://urdu.aaj.tv/image/stories/142750_story.jpg)
Title: Re: Exchange rate weakness & KSE-100
Post by: SBM on December 11, 2013, 11:02:11 AM
http://www.brecorder.com/br-research/44:miscellaneous/3942:dar%E2%80%99s-pep-talk-to-bankers/
Title: Re: Exchange rate weakness & KSE-100
Post by: MZ on December 11, 2013, 08:59:36 PM
(http://urdu.aaj.tv/image/stories/142833_story.jpg)
Title: Re: Exchange rate weakness & KSE-100
Post by: MZ on December 14, 2013, 11:30:49 PM
'Cash in' (http://tribune.com.pk/story/645537/cash-in-finance-minister-warns-exchange-rate-about-to-fall/)


Finance minister warns exchange rate about to 'fall'
Title: Re: Exchange rate weakness & KSE-100
Post by: Salammembers on December 14, 2013, 11:57:15 PM
'Cash in' (http://tribune.com.pk/story/645537/cash-in-finance-minister-warns-exchange-rate-about-to-fall/)


Finance minister warns exchange rate about to 'fall'

Business friendly Govt alerting mazloom Businessmen  :o
when Govt core slogan is;
Ghraib (poor) k kapraay utaroo-mulk sanwaroo   :bangin: :bangin: :bangin:
Finance minister talk up and talk down mkts in Develop world but in third world countries such
statements seen as `Sign of desperation` or a ` Threat `
recently heard ` Deal `done with super Rich to release their secret $ holding  but Dar public statement not encouraging
-looks more like a threat but lets c the impact on monday
Title: Re: Exchange rate weakness & KSE-100
Post by: MZ on December 18, 2013, 05:39:19 PM
Back-door deals? (http://tribune.com.pk/story/646912/back-door-deals-rupee-gains-despite-sbps-dollar-purchases/)
 Rupee gains despite SBP’s dollar purchases
Title: Re: Exchange rate weakness & KSE-100
Post by: MZ on December 19, 2013, 03:44:31 PM
The rupee ascended against the dollar and euro on the currency market on Wednesday in the process of trading, dealers said. The rupee maintained its journey in the positive territory, gaining 45-paisa against the dollar for buying and selling at Rs 106.60 and Rs 106.65 respectively, they added.

INTERBANK MARKET RATES: OPEN MARKET RATES: The rupee firmed as it gained 45-paisa in terms of the greenback for buying and selling at Rs 106.15 and Rs 106.25 respectively. It also went up sharply against the euro, rising rupee one for buying and selling at Rs 145.50 and Rs 145.75, they said.

In the third Asian trade, the dollar was on the back foot against the euro and the yen on Wednesday as traders cautiously looked to what the Federal Reserve will do with its stimulus--a major force that has simultaneously underpinned riskier global assets and restrained the dollar in recent years. The dollar's index stood at 80.02, having slipped from Monday's high of 80.419, with immediate support seen at the December 11 low of 79.757.

The dollar was at 61.79 in terms of the Indian rupee, the greenback was at 3.2580 against the Malaysian ringgit and the US currency was available at 6.0714 versus the Chinese yuan. Inter bank buy/sell rates for the taka against the dollar on Wednesday: 77.75-77.75 (77.75-77.75). Call Money Rates: 05.50-08.00 percent (previous 06.65-08.00 percent).


========================
Open Bid       Rs 106.60
Open Offer     Rs 106.65
========================
Title: Re: Exchange rate weakness & KSE-100
Post by: MZ on December 20, 2013, 06:21:17 PM
Macro: Currency appreciation unlikely to sustain 
?  Pakistan's currency has appreciated by 2% in Dec?13, the fourth highest monthly 
appreciation  in  the  last 30 years. The other  instances of more  than 2% monthly 
appreciation were in Oct?01, Nov?04 and Nov?09.  

?  Average  annual  PRs/US$  deval  has been  6.5%  in  the  last  30?years. Of  these,  in 
only two years (2002 and 2003) has the PKR appreciated against the USD.  In ten 
of the last thirty years, Rupee has fallen by more than 10% against the USD.  

?  The  recent  reversal  in  PKR  fortunes  has  been  on  the  basis  on  marginal 
improvement  in FX  reserves, yet  there has been no major  change  in balance of 
payments  outlook.  In  our  opinion,  fundamentals  do  not  support  sustained 
appreciation.  

?  We continue to expect the PKR/USD parity to reach 112 by June?14.  

KASB
Title: Re: Exchange rate weakness & KSE-100
Post by: MZ on December 20, 2013, 06:29:08 PM
PKR/USD review and outlook

PKR appreciated 2.03% against USD since December 04, 2013 on the expectation of upcoming foreign inflows mentioned by finance minister. In today’s Value Seeker we will discuss the current situation of foreign inflows and its impact on the local listed sectors. In addition to this, we further highlight the outlook of the same going forward.


2QFY14TD: PKR depreciates a meager 0.39% against USD

Although PKR inches down just 0.39% against USD during 2QTD, however, the exchange rate remained quite volatile during the said period. PKR touched its all time high levels of Rs111/USD on intra day basis however; same was showed some recovery and closed at Rs106.40/USD yesterday, registering a 2% appreciation against greenback in last 15days.

USD inflow-outflow and respective affect on parity

SBP kitty swells by USD505mn during last week to US$3.5bn from different financial institutions. Furthermore, IMF approved the 2nd installment amounting USD553mn yesterday under EFF arrangement. Both inflows are likely to further strengthen the PKR appreciation.

Going forward, the expected outflow of ~USD835mn uptil Mar’14 along with higher import bill (heavy oil imports due to gas shortage in winter) will create new pressure on rupee. However, expected CSF inflows of ~USD700mn, 3G auction inflows of ~USD1bn and next EFF installment of ~USD550mn uptil Mar’14 will ease off the possible stress on PKR.

Sectoral implications of PKR/USD parity

Recent appreciation of Pak rupee against US dollar and likely range bound movement of the same in the next quarter have important implications for different sectors:

OMCs: Exchange losses of the OMC sector (particularly of PSO) to reduce significantly

IPPs: Negative for IPPs as their tariff structure is linked with USD

Textile: Negative, margin on export of textile products is expected to reduce

Fertilizer: Positive, imported fertilizer prices will be reduced in local market

Outlook:

Currently, government is somewhat successful in strengthening PKR against USD. However, we believe this is a short run phenomenon as in the long run depreciation in PKR is expected to continue due to IMF payments and stringent trade gap.

AKD
Title: Re: Exchange rate weakness & KSE-100
Post by: MZ on December 20, 2013, 06:56:10 PM
Bulls persisted on the money market on Thursday as the rupee managed to keep its supremacy over the dollar and euro, dealers said. The rupee picked up 20-paisa in relation to the dollar for buying at Rs 106.40 and it also gained 23-paisa for selling at Rs 106.42, they added.

INTERBANK MARKET RATES: OPEN MARKET RATES: The rupee rose by 15-paisa in terms of the greenback for buying at Rs 106.00 and it gained five-paisa for selling at Rs 106.20. It maintained its surge versus the euro, rising 75-paisa for buying and selling at Rs 144.75 and Rs 145.00, they said.

In the fourth Asian session, the dollar was hoisted to a more than five-year high against the yen on Thursday after the Federal Reserve started to dial back its massive bond-buying stimulus, giving markets a strong signal that the US economy was growing at a healthy clip. The euro also came under pressure against the greenback, hitting a two-week low, and analysts at BNP Paribas continued to recommend short euro/dollar strategy. The dollar was trading against the Indian rupee at Rs 62.42, the greenback was at 3.2750 versus the Malaysian ringgit and the US currency was at 6.0729 in terms of the Chinese yuan.

========================
Open Bid       Rs 106.40
Open Offer     Rs 106.42
========================
Title: Re: Exchange rate weakness & KSE-100
Post by: MZ on December 21, 2013, 10:18:27 AM
Defying the market?
(http://tribune.com.pk/story/648465/defying-the-market-market-surprised-by-rupees-sudden-appreciation-in-interbank-market/)
Market surprised by rupee’s sudden appreciation in interbank market
Title: Re: Exchange rate weakness & KSE-100
Post by: Sharjeel on December 22, 2013, 06:57:12 PM
PKR/USD review and outlook

PKR appreciated 2.03% against USD since December 04, 2013 on the expectation of upcoming foreign inflows mentioned by finance minister. In today’s Value Seeker we will discuss the current situation of foreign inflows and its impact on the local listed sectors. In addition to this, we further highlight the outlook of the same going forward.


2QFY14TD: PKR depreciates a meager 0.39% against USD

Although PKR inches down just 0.39% against USD during 2QTD, however, the exchange rate remained quite volatile during the said period. PKR touched its all time high levels of Rs111/USD on intra day basis however; same was showed some recovery and closed at Rs106.40/USD yesterday, registering a 2% appreciation against greenback in last 15days.

USD inflow-outflow and respective affect on parity

SBP kitty swells by USD505mn during last week to US$3.5bn from different financial institutions. Furthermore, IMF approved the 2nd installment amounting USD553mn yesterday under EFF arrangement. Both inflows are likely to further strengthen the PKR appreciation.

Going forward, the expected outflow of ~USD835mn uptil Mar’14 along with higher import bill (heavy oil imports due to gas shortage in winter) will create new pressure on rupee. However, expected CSF inflows of ~USD700mn, 3G auction inflows of ~USD1bn and next EFF installment of ~USD550mn uptil Mar’14 will ease off the possible stress on PKR.

Sectoral implications of PKR/USD parity

Recent appreciation of Pak rupee against US dollar and likely range bound movement of the same in the next quarter have important implications for different sectors:

OMCs: Exchange losses of the OMC sector (particularly of PSO) to reduce significantly

IPPs: Negative for IPPs as their tariff structure is linked with USD

Textile: Negative, margin on export of textile products is expected to reduce

Fertilizer: Positive, imported fertilizer prices will be reduced in local market

Outlook:

Currently, government is somewhat successful in strengthening PKR against USD. However, we believe this is a short run phenomenon as in the long run depreciation in PKR is expected to continue due to IMF payments and stringent trade gap.

AKD

Just asking if imported fertilizer become cheaper then is it "positive" for local fertilizer ?
Title: Re: Exchange rate weakness & KSE-100
Post by: MZ on December 22, 2013, 07:51:33 PM
PKR/USD review and outlook

PKR appreciated 2.03% against USD since December 04, 2013 on the expectation of upcoming foreign inflows mentioned by finance minister. In today’s Value Seeker we will discuss the current situation of foreign inflows and its impact on the local listed sectors. In addition to this, we further highlight the outlook of the same going forward.


2QFY14TD: PKR depreciates a meager 0.39% against USD

Although PKR inches down just 0.39% against USD during 2QTD, however, the exchange rate remained quite volatile during the said period. PKR touched its all time high levels of Rs111/USD on intra day basis however; same was showed some recovery and closed at Rs106.40/USD yesterday, registering a 2% appreciation against greenback in last 15days.

USD inflow-outflow and respective affect on parity

SBP kitty swells by USD505mn during last week to US$3.5bn from different financial institutions. Furthermore, IMF approved the 2nd installment amounting USD553mn yesterday under EFF arrangement. Both inflows are likely to further strengthen the PKR appreciation.

Going forward, the expected outflow of ~USD835mn uptil Mar’14 along with higher import bill (heavy oil imports due to gas shortage in winter) will create new pressure on rupee. However, expected CSF inflows of ~USD700mn, 3G auction inflows of ~USD1bn and next EFF installment of ~USD550mn uptil Mar’14 will ease off the possible stress on PKR.

Sectoral implications of PKR/USD parity

Recent appreciation of Pak rupee against US dollar and likely range bound movement of the same in the next quarter have important implications for different sectors:

OMCs: Exchange losses of the OMC sector (particularly of PSO) to reduce significantly

IPPs: Negative for IPPs as their tariff structure is linked with USD

Textile: Negative, margin on export of textile products is expected to reduce

Fertilizer: Positive, imported fertilizer prices will be reduced in local market

Outlook:

Currently, government is somewhat successful in strengthening PKR against USD. However, we believe this is a short run phenomenon as in the long run depreciation in PKR is expected to continue due to IMF payments and stringent trade gap.

AKD

Just asking if imported fertilizer become cheaper then is it "positive" for local fertilizer ?

 imported fertilizer is negative for local manufatureres.
Title: Re: Exchange rate weakness & KSE-100
Post by: MZ on January 30, 2014, 12:29:48 AM
Rupee strengthens against dollar


Currency: (http://tribune.com.pk/story/665138/currency-rupee-strengthens-against-dollar-67/)
Title: Re: Exchange rate weakness & KSE-100
Post by: MZ on February 11, 2014, 06:06:11 PM
Despite IMF assurances, pressure on PKR likely to intensify

The second IMF staff mission under the EFF concluded on a satisfactory note, with Executive Board approval for the next tranche of US$550mn expected in late Mar-14.

The IMF expressed satisfaction on the pace of govt reforms, noting also that economic growth prospects are improving; GDP growth target for FY14 has been raised to 3.1% from 2.8% previously.

All quantitative targets for Dec-13 were met, with the exception of SBP’s net swap/forward position, and the ceiling on government borrowing from SBP. The Executive board is expected to allow waivers in this regard.

Although IMF board approval is welcome, we believe that Pakistan will face significant balance of payments issues ahead. In CY14, Pakistan has loan repayments of US$6.2bn due and swap positions of US$2.7bn are also maturing. 

 On the inflow side, IMF disbursement will be US$2.2bn in the year. A delay in other expected inflows would result in renewed currency pressures. We maintain our PKR/USD target of 112 by June-14.

KASB
Title: Re: Exchange rate weakness & KSE-100
Post by: MZ on February 18, 2014, 08:50:18 PM
Whats behind rupee appreciation?

Economists, analysts and market participants are all puzzled by the recent improvement in rupee-dollar parity in the face of falling SBP liquid reserves. The movement is counterintuitive and defies basic economic principles.

Some suspect that the currency market is being forcefully stabilized by the countrys economic (or accounting) managers while others believe that the worse is over and the market, in anticipation of better days, has adjusted for good. The hopefuls among us wish that the latter camp is right and that SBPs forecast of liquid reserves ($6.7 billion) might turn out to be true.

It is pertinent to note that the Finance Minister publicly announced a few months back that rupee-dollar parity would significantly improve after it nosedived in the first quarter. And it did!

Now, some may argue that its the Finance Ministrys proverbial stick on exchange companies, banks, importers and exporters which is doing the trick. They add that it is essentially the short positions in swap arrangements and high import financing against FE25 accounts that are delaying the inevitable free fall in currency. The short position in swaps of $1,800 million maturing by the end of April can result in sharp depreciation of rupee to touch 112-mark against the dollar.

However, the point is that the reserves situation is not as bleak as it appears to be on paper. The SBP liquid reserves, standing at $2.84 billion as of February 7, have already shown improvement. Sources privy to the SBP say that reserves are above $3 billion as of today, and the numbers, due to be published on Thursday, would soon confirm it.

Some also believe that the position is going to improve gradually every Thursday, and that forex reserves could hit $3.8 to $4 billion by the end of this month.

The underlying rationale behind this expectation is the one stated earlier: the worst is over in terms of repayment and without assuming the tall claims of Ministry of Finance, SBP liquid reserves are slowly but surely improving from $3.8 to $4 billion by February end. The reserves are expected to reach $4.7 billion by March end to eventually $6.7 billion by the end of fiscal year. This is probably what the big market players are reading whereas others are failing to understand.

Most participants believe that reserves will surely improve from now on, that fundamentally, the currency is stabilized now, and therefore, it will likely hover around Rs104-106 against the greenback in the third and fourth quarters. The swap position is normal and that can be explained by a comfortable six months forward premium of 7 percent. This implies that banks can easily sell forward contract of dollar to buy rupee liquidity for interim period to invest in T-Bills and enjoy the spreads of 2-2.5 percent.

Also note that both the exporters and importers are showing no signs of panic at this point of time. The former are not delaying their payments both in spot and forward contracts as expectations have improved, while the import forward cover is not abnormal as well. The sentiments of traders are seemingly much better than what they were in October and November last year.

But, given the volatile nature of economic recovery and looming doubts on sustainability of economic stability, no one can sit and relax. No one can say with certainty that the worst is over or expect that all will be honky-dory going forward. Cautious is still advised!
Title: Re: Exchange rate weakness & KSE-100
Post by: MZ on March 11, 2014, 09:05:58 AM
Will rupee appreciation last?

The ongoing currency volatility is the highlight of the new governments economic management. Indeed, it is a job well done by Mr. Accountant, as the currency has appreciated consistently ever since he claimed that he would pull it back below the 100 mark. The rupee closed below 102 against the greenback yesterday.

Is it the desired outcome for an economy which needs to boost exports for creating employment and curb imports to avert balance-of-payment crises? Yes, it could have been if the currency appreciation would have been sustainable and our exports would have been naturally competitive. But, there are doubts looming over the stability of the currency at these levels whereas our major export-textile-is facing stiff competition from similar economies.

The prime reason for rupee to revert back sharply in the last week is the building up of SBP reserves which are up from the low of $2.84 billion to $3.92 billion in a span of three weeks. Some of the flows like CSF money were well anticipated but the market was surprised by around $700 million jump in reserves in the third week of February. That is probably due to $750 million in aid coming from Saudi Arabia for some military related supports to the Kingdom.

That has changed the sentiments--punters, traders and treasurers are expecting reserves to build up further on account of some negotiations going on with KSA and some GCC countries for deferred oil payments. The government has almost finalized a deal with KSA for six months deferred oil payments for a period of three years, similar deals are envisaged with Kuwait and the UAE.

Together, these measures can give a cushion of over $5 billion in imports payment in next six months and that can be continued for three years. Even, only with Saudis we can save $400-500 million per month in oil import payments for six months and forex reserves to be up by same amount. No wonders, the SBP expects its reserves to reach by $4.7 billion by April end and $6.7 billion by June end (See BR Research article Whats behind rupee appreciation?" published on Feb 18).

This information has changed the market sentiments, thereby creating a domino effect as many who were holding back dollars for months are now offloading them to book the loss, and that has resulted in further appreciation in the currency. Plus, the USD is falling internationally for a host of reasons--the Indian rupee has appreciated by 3-4 percent last week against USD, so Pakistani market is no exception.

But this sudden appreciation in currency without strong macroeconomic fundamentals has all the potential to worsen current account balance and can make currency more volatile. Its a big loss to exporters--if the dollar is down by one rupee, our textile exports lose out Rs12billion per annum, so in the last week potential loss is close to Rs50billion. Soon the strong textile lobby and large vote bank in Faisalabad may approach PML-N leadership to bail them out.

Plus, its going to be windfall for importers to enjoy higher margins by not fully passing on the impact of rupee appreciation. Even if they do pass on the benefit then higher import demand may put a pressure on balance-of-payment.

Mind you, there were talks of having import compression by higher duties on non-essential imports and what is happening is an exact opposite of it. Then, there is less incentive for expatriates to remit when the currency is overvalued. Although, right now people would send more before the rupee falls below 100 but over the medium term remittances can fall.

In a nutshell, Ishaq Dars one point economic management to tame the currency can be counterproductive. He must think along on the repercussions of overvalued currency. Its not far when the lobbies would reach Nawaz Sharifs doors and Dar would be forced not to intervene too much. May one also remind that the IMF is not going to like exporters becoming uncompetitive, which makes one wonder how long will the rupee remain around or below the 100 dollar mark!
Title: Re: Exchange rate weakness & KSE-100
Post by: ovais muammad on March 11, 2014, 10:44:45 AM
wow dollar below 100 in interbank market
Title: Re: Exchange rate weakness & KSE-100
Post by: GlobalInvestor on March 11, 2014, 01:03:24 PM
Macro: Currency appreciation unlikely to sustain
?  Pakistan's currency has appreciated by 2% in Dec?13, the fourth highest monthly
appreciation  in  the  last 30 years. The other  instances of more  than 2% monthly
appreciation were in Oct?01, Nov?04 and Nov?09. 

?  Average  annual  PRs/US$  deval  has been  6.5%  in  the  last  30?years. Of  these,  in
only two years (2002 and 2003) has the PKR appreciated against the USD.  In ten
of the last thirty years, Rupee has fallen by more than 10% against the USD. 

?  The  recent  reversal  in  PKR  fortunes  has  been  on  the  basis  on  marginal
improvement  in FX  reserves, yet  there has been no major  change  in balance of
payments  outlook.  In  our  opinion,  fundamentals  do  not  support  sustained
appreciation. 

?  We continue to expect the PKR/USD parity to reach 112 by June?14. 

KASB

Temporary Political Measure cant harness National Economy WE see USD around 112 in near future though Gen Public can get Scared but they are very few and holding some chunks only the Currency Dealrs would have Maximum Benefit of this Game, Good Luck :fingerscrossed1:
Title: Re: Exchange rate weakness & KSE-100
Post by: ovais muammad on March 11, 2014, 01:21:32 PM
come on guys its a good thing that at least dollar came down below 100 after so many days. Don't think too much of the future in order to enjoy this moment.Few months back evrybdoy was saying dollar to reach 120 and 100 is a dream.You see only God knows what will happen next.We all can only predict.
Title: Re: Exchange rate weakness & KSE-100
Post by: waqasmujahid on March 12, 2014, 10:00:50 AM
Sab Satta hy G
93 par reverse lagaey ga aur is dafa 120 ka he suna hy
Title: Re: Exchange rate weakness & KSE-100
Post by: ovais muammad on March 12, 2014, 10:06:38 AM
Allah SAY DUA HAAI KEH IS BAR SATTA NA HO BLAKAY MULK SAHEE BUNYAAD PAR TARAQQI KARAY AMEEN SUMMAAMEEN
Title: Re: Exchange rate weakness & KSE-100
Post by: aliraza on March 12, 2014, 11:24:26 AM


dollor 97.75
Title: Re: Exchange rate weakness & KSE-100
Post by: ovais muammad on March 12, 2014, 11:34:43 AM
LAO SHEKH RASHEED KA RESIGNATION LETTER LAO
Title: Re: Exchange rate weakness & KSE-100
Post by: MZ on March 13, 2014, 06:26:15 PM
PKR/USD Parity: Positive prospects to remain intact in short run


The present situation is encouraging as PKR getting stronger against the USD, stamping out the possibility of a renowned confront for the economy. The lowered volatility in PKR against the green back has made USD an unattractive investment thus repelling investor's interest. This along with upcoming inflows due in remaining period of the year is expected to further weaken the green back against Pak Rupee. In today's Value Seeker, we present a discussion on the factors influencing the aforesaid upward pace of PKR against USD.

Remittances up by 11%YoY to USD10.2bn to boost FX reserves

Overseas Pakistanis remitted USD10.2bn in 8Mfy14 v/s USD9.2bn during same period last year implying a YoY growth of 11%. We expect, the remittances will cross the USD15bn mark in FY14 as compared to USD13.9bn in FY13 and will set a new all time high.  The hefty inflow likely to reduce current account balance and will boost our FX reserves. Furthermore, remittances hike is anticipated to keep pressure on USD on account of better reserves situation.

Upcoming inflows to further strengthen PKR

The current government efforts have bore fruit as PKR is regaining its lost ground after touching its peak of PKR111/USD in early FY14. The expected healthier foreign inflows from different sources have played a major role in strengthening the PKR against USD.

The rising trend in country's export and low pace of imports were also supporting PKR against USD. Currently, we expect exporters to short their upcoming position in forwards due to fear of further exchange rate losses and importers seem reluctant to book USD at current levels owing to expected further depreciation in USD, as a result trading demand of USD is easing off.

Once the dollar started losing its feet, the currency speculators also began to reverse their positions. This, along with the expected dollar inflows, makes picture look positive for the local currency. At the same time, we don't expect any extreme pressure on PKR despite the likely settlement of outstanding swap in USD by SBP.

Outlook

We expect the appreciation of PKR to further ease of the inflation in the near future and together with upcoming strong inflows, keep PKR stable at below PKR100/USD during FY14.

Investcap
Title: Re: Exchange rate weakness & KSE-100
Post by: MZ on March 13, 2014, 06:31:56 PM
PKR appreciation and higher dividends: KSE a heaven for yield seeking foreign investors
 
KSE-100 continues to offer highest dividend yield among its regional peers; despite that it lacked in attracting its due share of foreign portfolio investments compared to its regional peers. Though, several factors - low GDP growth, poor law and order situation, power shortages, uncertainty in companies earnings, low liquidity and shares turnover etc., had contributed in keeping away the foreign investors from the market -, however, another major factor that shied away foreign portfolio investors was the depreciating PKR/US$ which served the neutralizing effect of dollar-based high dividend yield. PKR continued to depreciate against the US$ at an average rate of 5% during the last 5 years; thereby bringing net dividend yield to minimal.

AHMCL
Title: Re: Exchange rate weakness & KSE-100
Post by: MZ on March 19, 2014, 06:43:58 PM
PKR Appreciation Impact & Outlook

Both pros and cons of the recent appreciation but sustenance remains a question mark

After devaluing by around 6% against USD in the 1HFY14, PKR has surprisingly appreciated by a hefty 7% in 3QFY14TD, making it one of the best performing currencies in the world during CY14. After the SBP forex reserve touched a multiyear low of around USD3bn in February, things seem to be finally improving with an unexpected USD1.5bn received under the Pakistan Development Fund (PDF) head contributed by a friendly nation. The surprise addition in reserves has had a knock on effect on different speculators and exporters who were storing USD in anticipation of further rupee decline.

Whether the current trend is sustainable or not is difficult to answer because of lack of clarity over further quantum of receipts under the PDF. Government circles are hinting towards oil deferral payment agreement to be signed with Saudi Arabia and Kuwait and further receipts under PDF in future as well. These developments are game changers, so if they do materialize, we for see that PKR will remain range bound at current level throughout the calendar year. Absence of development on this front, however will likely result in rupee devaluation.

While not denying the positives from recent PKR appreciation, we are of the view that negatives outweigh the positives given the structural deficit issue which the country faces. Compared to USD6bn forex reserves of SBP in June 2013 (USD11bn in June 2012), these reserve currently stand at USD4.6bn, despite the USD1.5bn grant. Thus, to show no devaluation on FY14TD basis is a bit questionable. If this trend continues, then the trade deficit will render further pressure on precarious forex reserves.

On the equity market front, the impact of PKR appreciation is overall negative, since the key sectors earnings are directly or indirectly dollar linked. On the flip side, a stable PKR may lead higher foreign portfolio investment and eventual inflation/interest rate decline may result in rerating for the market.

taurus
Title: Re: Exchange rate weakness & KSE-100
Post by: MZ on March 20, 2014, 07:27:31 PM
T-bill auction highlights fast changing expectations

The T-bill auction conducted yesterday provides a clear indication about bond market expectations of a DR cut ahead.

The bulk of the interest (PRs171bn) was in the 12 month paper, PRs43bn in the 6 month bill, and a mere PRs18bn in the 3 month. This is a U-turn from the previous auction on 5th March 2014.

With minimal yield differential between different tenors, the only motivation to invest in the 12 month bill is emanating from the expectation of a DR cut ahead.

Overall participation of PRs232bn was well below maturity of PRs407bn, and a target of PRs500bn. In our opinion, banks held back liquidity to participate in the upcoming PIB auction on 26th March 2014.

Whilst the recent PKR appreciation has provided the govt with crucial breathing space to carry out its reform and privatization program, it is in-of-itself not enough. Success on the privatization front within the next 6 months would be critical to cement these gains.

We continue to expect a 50bps cut in the DR in the May-14 MPS.

KASB
Title: Re: Exchange rate weakness & KSE-100
Post by: SBM on March 28, 2014, 11:15:27 PM
http://www.imf.org/external/pubs/ft/scr/2014/cr1490.pdf

22. Given critically low reserves, the SBP and government should continue to focus on
building reserves. Staff encouraged the authorities to take advantage of the current favorable
market conditions and continue purchasing foreign reserves in the spot market to build cushions
and meet program NIR targets. The SBP has purchased US$300 million from the spot market by
end-February and is on track to meet the end-March program target on NIR. As a corrective action
the SBP has also reduced its net short position in foreign exchange swap/forward contracts to
US$2,300 by end-February and is on track to meet the end-March program ceiling. The unwinding
of swap/forward contracts has also helped to sterilize the domestic liquidity injected through SBP’s
foreign exchange purchases. A more flexible exchange rate will help SBP to reach their reserves
objective and boost competitiveness. Staff stressed that the authorities should stand ready to take
additional action, including increased foreign exchanges purchases and further tightening of
monetary policy if there are delays in anticipated inflows (e.g., from privatizations). Further
adjustment in the policy rate is also warranted to help better manage domestic liquidity (including
sterilization of foreign exchange purchases) under the NDA target, attract capital inflows, and
maintain price stability. The SBP agreed to continue market purchases of foreign exchange and to
consider additional adjustments in the policy rate if needed to reach the inflation and reserves
accumulation objectives
Title: Re: Exchange rate weakness & KSE-100
Post by: SBM on April 23, 2014, 01:36:28 AM
well written ..


http://www.brecorder.com/editorials/0:/1175599:ca-deficit-and-foreign-exchange-reserves/?date=2014-04-22

It looks odd, if not altogether confusing, that foreign exchange reserves of the country are increasing and rupee is strengthening when its current account deficit is deteriorating. According to the latest data released by the State Bank on 17th April, 2014, current account deficit of the country during July-March, 2014 was much higher at dollar 2.173 billion than dollar 1.2 billion in the corresponding period last year. Larger deficit was attributable mainly to the substantial fall in exports of services to dollar 3.722 billion in the current year compared to dollar 5.432 billion last year while deficit on merchandise account at dollar 12.08 billion was also somewhat higher by dollar 496 million than last year. While the country has recorded a C/A deficit of over two billion dollars so far, Finance Minister Ishaq Dar is continuously boasting about the sharp appreciation of the rupee and the increase of country's foreign exchange reserves to dollar 11.67 billion. Addressing a press conference, he also announced that country's reserves would reach dollar 15 billion by end-September, 2014 and attributed the shoring up of country's reserves to the government's efforts to improve macroeconomic indicators. The worst phase of the economy was now over and the country was on the road to stability, he claimed.

Finance Minister is quite discerning when he speaks about the rise in reserves and claims that the estimate was made on the basis of likely inflows that the country would receive from various sources, especially from the IMF, the World Bank and the Asian Development Bank. The World Bank had agreed to provide two concessionary loans, including dollar one billion for revenue and energy development in the first week of May, 2014. Pakistan would also receive dollar 600 million for Dasu project and dollar 100 million for Sindh Irrigation System in the last week of next month. Remaining fund requirements of Dasu dam would also be met by the World Bank which would provide dollar 3.2 billion under the next aid programme. The country had entered into a project partnership strategy with the World Bank under which Pakistan would receive dollar 11 billion between 2015 and 2019. ADB would provide programme loan of dollar 400 million in the first week of May while US Exim Bank has also been requested for the same. Islamic Development Bank (IDB) was also providing a loan of dollar 137 million. While dollar 2 billion had already been received through the sale of bonds, Pakistan would also launch Islamic Sukuk bonds in the international market. Government had taken up the issue of pending payments of dollar 1.5 billion with the US against Coalition Support Fund and the country would receive dollar 380 million by the end of this month. While announcing the likely increase in reserves, Ishaq Dar also made two claims to justify his strategy. Firstly, he was not willing to accept that these sources of inflows would enhance the country's debt servicing liabilities. And secondly, there would be no increase in national debt as the raising of dollar 2 billion through bonds would reduce the domestic debt correspondingly.

We are happy to note that the country's foreign exchange reserves are likely to increase to a comfortable level in the coming months but fail to understand the enthusiasm or bragging by the Finance Minister about the sources of their origin as indicative of a turnaround or better performance of the economy. Government could definitely claim credit of such an achievement if the rise in foreign exchange reserves was brought about by improvement in the current account position which is the norm in other countries. The situation would have been even better if unrequited transfers and autonomous inflows would have improved to make the difference. The fact that the country's overall C/A deficit was over dollar 2 billion during FY14 so far and loans and one-off receipts were not only used to plug this deficit but to boost foreign exchange reserves reflects a poor strategy, which is both unsustainable and harmful for the country in the medium to long-term. It seems that the Finance Minister is a very good loan negotiator but has not been able to bring a structural improvement in the external sector of the country on a lasting basis. Seen closely, the country is heading towards a crisis in the external sector in the years to come by getting loans from all conceivable sources and postponing the inevitable. Sharp appreciation of the rupee could make the things worse. The claim of the government that securing loans from various quarters would not enhance the country's debt appears to be unfounded. It is also unbelievable that the floatation of bonds in the international market, as claimed by the Finance Minister, would yield an annual saving of dollar 90 million since the cost of domestic debt is now averaging 12.25 percent while rate to be paid on external bonds would be 7.75 percent. Clearly, such a comparison to prove a point is misplaced. Various kinds of foreign inflows are deposited with the SBP, boosting its foreign exchange reserves which are then deposited with various banks, mostly abroad. At present, dollar deposits do not earn more than two percent which means a net loss of almost 6 percent per annum on the amount raised through bonds. Seen from another angle, dollar inflows would now be credited to the government account at the current rate of about Rs 98 to a dollar that the country has to buy at a depreciated rate of rupee for repayment after five or ten years. The country would incur an exchange loss unless its macroeconomic fundamentals improve significantly. The finance minister is right in asserting that securing of loans through bonds would not enhance the overall debt of the country but he has failed to mention that domestic liabilities of the government would be converted into foreign liabilities which would be much more risky since the country has to pay back the borrowed amount in foreign exchange. Keeping all the factors in view it is essential for Pakistan to build foreign exchange reserves through a surplus in current account rather than external borrowings from left, right and centre. The present policy could provide a temporary relief but would drown the country in debt and put almost unbearable burden on the external sector of the economy after a few years.
Title: Re: Exchange rate weakness & KSE-100
Post by: umair vohra on April 23, 2014, 11:24:38 AM
well written ..


http://www.brecorder.com/editorials/0:/1175599:ca-deficit-and-foreign-exchange-reserves/?date=2014-04-22

It looks odd, if not altogether confusing, that foreign exchange reserves of the country are increasing and rupee is strengthening when its current account deficit is deteriorating. According to the latest data released by the State Bank on 17th April, 2014, current account deficit of the country during July-March, 2014 was much higher at dollar 2.173 billion than dollar 1.2 billion in the corresponding period last year. Larger deficit was attributable mainly to the substantial fall in exports of services to dollar 3.722 billion in the current year compared to dollar 5.432 billion last year while deficit on merchandise account at dollar 12.08 billion was also somewhat higher by dollar 496 million than last year. While the country has recorded a C/A deficit of over two billion dollars so far, Finance Minister Ishaq Dar is continuously boasting about the sharp appreciation of the rupee and the increase of country's foreign exchange reserves to dollar 11.67 billion. Addressing a press conference, he also announced that country's reserves would reach dollar 15 billion by end-September, 2014 and attributed the shoring up of country's reserves to the government's efforts to improve macroeconomic indicators. The worst phase of the economy was now over and the country was on the road to stability, he claimed.

Finance Minister is quite discerning when he speaks about the rise in reserves and claims that the estimate was made on the basis of likely inflows that the country would receive from various sources, especially from the IMF, the World Bank and the Asian Development Bank. The World Bank had agreed to provide two concessionary loans, including dollar one billion for revenue and energy development in the first week of May, 2014. Pakistan would also receive dollar 600 million for Dasu project and dollar 100 million for Sindh Irrigation System in the last week of next month. Remaining fund requirements of Dasu dam would also be met by the World Bank which would provide dollar 3.2 billion under the next aid programme. The country had entered into a project partnership strategy with the World Bank under which Pakistan would receive dollar 11 billion between 2015 and 2019. ADB would provide programme loan of dollar 400 million in the first week of May while US Exim Bank has also been requested for the same. Islamic Development Bank (IDB) was also providing a loan of dollar 137 million. While dollar 2 billion had already been received through the sale of bonds, Pakistan would also launch Islamic Sukuk bonds in the international market. Government had taken up the issue of pending payments of dollar 1.5 billion with the US against Coalition Support Fund and the country would receive dollar 380 million by the end of this month. While announcing the likely increase in reserves, Ishaq Dar also made two claims to justify his strategy. Firstly, he was not willing to accept that these sources of inflows would enhance the country's debt servicing liabilities. And secondly, there would be no increase in national debt as the raising of dollar 2 billion through bonds would reduce the domestic debt correspondingly.

We are happy to note that the country's foreign exchange reserves are likely to increase to a comfortable level in the coming months but fail to understand the enthusiasm or bragging by the Finance Minister about the sources of their origin as indicative of a turnaround or better performance of the economy. Government could definitely claim credit of such an achievement if the rise in foreign exchange reserves was brought about by improvement in the current account position which is the norm in other countries. The situation would have been even better if unrequited transfers and autonomous inflows would have improved to make the difference. The fact that the country's overall C/A deficit was over dollar 2 billion during FY14 so far and loans and one-off receipts were not only used to plug this deficit but to boost foreign exchange reserves reflects a poor strategy, which is both unsustainable and harmful for the country in the medium to long-term. It seems that the Finance Minister is a very good loan negotiator but has not been able to bring a structural improvement in the external sector of the country on a lasting basis. Seen closely, the country is heading towards a crisis in the external sector in the years to come by getting loans from all conceivable sources and postponing the inevitable. Sharp appreciation of the rupee could make the things worse. The claim of the government that securing loans from various quarters would not enhance the country's debt appears to be unfounded. It is also unbelievable that the floatation of bonds in the international market, as claimed by the Finance Minister, would yield an annual saving of dollar 90 million since the cost of domestic debt is now averaging 12.25 percent while rate to be paid on external bonds would be 7.75 percent. Clearly, such a comparison to prove a point is misplaced. Various kinds of foreign inflows are deposited with the SBP, boosting its foreign exchange reserves which are then deposited with various banks, mostly abroad. At present, dollar deposits do not earn more than two percent which means a net loss of almost 6 percent per annum on the amount raised through bonds. Seen from another angle, dollar inflows would now be credited to the government account at the current rate of about Rs 98 to a dollar that the country has to buy at a depreciated rate of rupee for repayment after five or ten years. The country would incur an exchange loss unless its macroeconomic fundamentals improve significantly. The finance minister is right in asserting that securing of loans through bonds would not enhance the overall debt of the country but he has failed to mention that domestic liabilities of the government would be converted into foreign liabilities which would be much more risky since the country has to pay back the borrowed amount in foreign exchange. Keeping all the factors in view it is essential for Pakistan to build foreign exchange reserves through a surplus in current account rather than external borrowings from left, right and centre. The present policy could provide a temporary relief but would drown the country in debt and put almost unbearable burden on the external sector of the economy after a few years.

medium long term mai ALLAH he bheter jannay Dollar ke devaluation ki waja say wesy he export decline karahi hai or infuture Multiplier effect hongay due to decline in Export Deficit Account kaha per rukhay ga ALLAH jannay
Title: Re: Exchange rate weakness & KSE-100
Post by: SBM on May 12, 2014, 06:24:55 AM
Firstly, the focus should be on real effective exchange rate (REER) that captures the rate of inflation differential with trading partners. According to the SBP, REER was appreciating till December which means the currency was depreciating and industry was gaining competitive edge. Ever since then, the curves topple over - REER has appreciated by 8 percent in the third quarter to reach at 109.67. In order to have the same REER as of December 2013, nominal exchange rate had to be at Rs105.8 per USD today.

Then according to the IMFs projections, Pakistans REER had to depreciate by 7.7 percent in FY14 but it has actually appreciated by 2.8 percent, so nominal currency has to devalue by 10.5 percent from today to June end to meet the funds expectations. This gives a good handle to see where the currency needs to be to counter the inflation difference with trading partners

http://www.brecorder.com/br-research/44:miscellaneous/4405:the-real-cost-of-exchange-rate-management/
Title: Re: Exchange rate weakness & KSE-100
Post by: MZ on June 17, 2014, 06:34:05 PM
FY15 PKR/USD to remain favorable on strong macro variables

In addition to net foreign inflows estimated in budget FY15, recent behavior of certain macroeconomic variables also demonstrate favorable implications for PKR/USD.  In today’s Value Seeker we will discuss the interplay between these variables and PKR/USD.

Budget FY15: Foreign proceeds to support PKR/USD stability

In a detailed publication of budget FY15, estimation of foreign loans for plan resources stand at Rs869bn (equivalent to USD9bn) up from revised target of FY14 of Rs714bn (equivalent to USD 7bn).  On other side, servicing of foreign debt and foreign loan repayment constitute Rs434bn (USD 4.5bn) for FY15 which makes roughly 48% of total inflows in the form of loans and grants. Within grants and loans, it is expected that 23% of estimated loans will come from privatization proceeds. China and ADB will contribute 17% and 8% respectively. In FY15, gov’t will again tap foreign debt markets by issuing Sovereign bonds and Sukuk bonds. The total proceeds from these bonds will contribute 12% to total loans and grants. In our view, such influx of foreign loans and grants will impact exchange rate positively. We expect that stability of PKR against USD will continue in FY15 and will hover around PKR98-99/USD.

11MFY14: Strong Workers’ Remittances to support Parity

As per the latest data released by SBP on home remittances for the month of May’14, cash inflows remained strong and showed material improvement of 9.6% MoM as remittances spiked to $1,438mn in comparison with $1,312mn recorded a month earlier. July-May comparison portrays a much healthier picture as remittances stood at $14,333mn (up by 12% YoY) as opposed to $12,755mn received in the same period last year. The majority of inflows were received from Gulf Co-operation Council (GCC) as it contributed 61% ($8,763mn) to the overall receipts followed by USA & UK contributing 16% ($2,242mn) & 14% (1,979mn) respectively. From the evidence of these strong foreign inflows, the PKR is expected to hold on to the recent gains and stay resolute at current levels.

Trade deficit shrinks by 6%YoY in 11MFY14

During 11MFY14 trade deficit decline by 5.7%YoY to USD17.7bn as against USD18.7bn during same period last year. Rise in exports by 3.7%YoY to USD23.1bn during the period under review was the key reason behind this favorable balance of trade. While on the other hand imports inched down by a meager 0.57%YoY to USD40.8bn. In PKR term, trade deficit widens by 0.63%YoY to Rs1820bn reflecting favorable impact of PKR appreciation against greenback during FY14. Going forward, we expect trade deficit to remian immune from currency movement as PKR/USD is likely to remain stable.

Impact of stable PKR/USD on sectors

From above analysis, we extract the PKR/USD parity to maintain its current level of below PKR100/USD. If this assumption holds true the exporting sectors mainly Textiles and Cements will be negatively effected as the same fails to reap the benefits of PKR depreciation as evident empirically. On the other hand, importing sectors mainly Oil and Gas, Autos, Pharma will benefit from stable PKR by avoiding currency losses on imports.

 InvestCap
Title: Re: Exchange rate weakness & KSE-100
Post by: MZ on July 16, 2014, 09:21:00 PM
According to media, SBP has recently updated the figures of Foreign Direct Investment (FDI) and workers’ remittances where the said accounts reflected double digit growth. In today’s Value Seeker we discuss these heads in detail along with impact of the same on PKR/USD parity.

Telecom spectrum auction takes FDI higher by 12%YoY

During FY14, net FDI has increased by 12% to USD1.63bn as against 1.46bn in FY13 with highest inflows cited in telecom sector. Net investment in telecom sector stood at USD568mn in FY14 with one time inflow of USD611mn (May’14) for 3G/4G auction. However, FDI seems unattractive after removing the one-off proceeds of spectrum auction. Oil and Gas positioned 2nd in sector-wise FDI distribution with net investment of USD465mn followed by Financial Services and Chemicals with net inflows of USD157mn and USD88mn respectively. Petroleum Refining was the sector which experienced a considerable outflow of USD17mn in FY14.

Country-wise study reveals that highest net investment of USD700mn was evident from China in FY14 followed by Switzerland, Hong Kong, United States and UK with net inflows of $226mn, $227mn, $206mn and $116mn respectively.

Workers’ remittances up by 13.7%YoY to USD15.8bn

Workers’ remittances clocks in at USD15.8bn in FY14 as against USD13.9bn in FY13; up by 13.7%YoY. In absolute terms, remittances from Saudi Arabia were highest at $4.7bn as against $4.1bn during FY13, depicting a YoY growth of 15.2%. Other countries with major remittances include USA, UK, Dubai and Abu Dhabiwith inflows of $2.5bn (12.7%YoY), $2.2bn (12%YoY), $1.6bn (27.7%YoY) and $1.5bn (1.8%YoY) respectively. Remittances from Norway plunged by 18.7%YoY to $30.8mn in FY14 as against $37.8mn during FY13.

Outlook

We expect FDI will further grow in FY15 after successful completion of ongoing army operation in North Waziristan and privatization of OGDCL, PIA and PSM as directed by IMF. Furthermore, workers’ remittances are also anticipated to grow on expanding presence of Pakistani workers in international job market. The increase in both accounts will further strengthen PKR against greenback by building foreign investors’ confidence and keeping current account in check.  By considering this, we foresee that the PKR/USD parity will remain ~Rs100/USD.

investcap
Title: Re: Exchange rate weakness & KSE-100
Post by: SBM on July 19, 2014, 07:28:58 AM
http://tribune.com.pk/story/737592/missing-another-mark-trade-gap-widens-beyond-imf-govts-expectation/

Title: Re: Exchange rate weakness & KSE-100
Post by: SBM on July 21, 2014, 04:41:05 AM
Consistent inconsistencies
July 21, 2014 BR Research0 CommentsE-mailPrintPDF
A host of discrepancies is becoming visible in a variety of economic numbers released at various forums. The recent case of underreporting of GDP numbers in the IMF LOI, which the finance ministry blamed on a typo, is one such example. Or, the $1.5 billion gift from KSA, which was initially shown as “statistical discrepancies”. The story of showing 5.1 percent GDP growth in first quarter by PBS was not different. The latest addition to the list of discrepancies comes on the external account front.

The so-called star performance of Finance Minister Ishaq Dar is the improvement in balance-of-payment with reserves almost doubled from its low in six months time and currency (artificially) stabilized at promised levels. Intriguingly, a detailed scrutiny of IMF’s country report along with the letter of intent duly signed by Finance Minister and Governor State Bank reveals a contrasting picture.

The table of Pakistan gross financing requirements and sources shows that the maturing of short-term external debt in FY15 is $2.3 billion as against $0.5 billion last year. This is a big number as it has to be repaid soon and implies that a good chunk of reserves building is based on weak foundations. Plus, the SBP has not shown this in any of its recent reports or publication.

Many questions arise from it. What has compelled government to borrow so heavily? Who are the lenders? What type of credit is this? Is it deferred payment of oil imports or is it dipping into the foreign currency accounts-– adjustment against FE25? Or the government borrowed cash? The SBP and Ministry of Finance must reveal these details as balance-of-payment numbers published by SBP are not showing it.

However, our economic managers have given a detailed plan to the IMF which states that gross external financing requirement for FY15 is at $10.8 billion as compared to $9.4 billion last year. This includes current account deficit of $3 billion out of which Coalition Support Fund money is projected at $1.4 billion. Now with the US exiting from Afghanistan and making India as its strategic ally in the region, this money is likely to remain elusive. It is pertinent to note that USA has not released the third installment, which was due in the last quarter.

The amortization of medium- and long-term debt at $5.4 billion is not much different from what it was in FY14 ($5.8bn) as IMF repayments are lowered to half in FY15; but it is largely replaced by higher payment to other official creditors.

The available financing projected at $6.4 billion and its lion’s share is expected to come from FDI and privatization proceeds ($4.3bn). The rest is medium- and long-term borrowing ($1.6bn) and the rollover of short-term debt ($1bn). While the other net capital flows are anticipated at $3.5 billion.

The financing gap is to be partially filled by the IMF ($2.2bn) and whatever is left, after filling other official creditors, is promised to be provided by the World Bank. For FY15, this amount stands at $1.3 billion. In the process, foreign reserves are calculated to increase by $4 billion in FY15 which is higher than overall increase in FY14.

All this seems too honky-dory as the reserves are expected to pick up further by $3.9 billion and $1.7 billion in the subsequent two years. But don’t get carried away without seeing the bottom line.

The natural consequence to higher support from creditors is the piling up of external debt. When the PPP’s government left, the external debt was $59.8 billion (19.6% of GDP). The PML-N government in its first year has increased it to $66.1 (21.5% of GDP) and is expected to swell to $79.3 billion by FY18.

The repercussions of higher debt on the balance of payment after FY18 could be huge (See BR Research column: “The dark underbelly of external loans” May 21, 2014). Mind you, the $79.3 billion external debt amount does not include the money coming from China that has pledged $32 billion for power and infrastructure projects in Pakistan. And last but not the least, the deduced number from IMF’s document is that the fund and the government agreed upon a parity of Rs112 per USD in FY15, whereas Dar is promising it to keep below hundred. Isn’t it ironic?
Title: Re: Exchange rate weakness & KSE-100
Post by: GlobalInvestor on July 21, 2014, 11:59:12 AM
Macro: Currency appreciation unlikely to sustain
?  Pakistan's currency has appreciated by 2% in Dec?13, the fourth highest monthly
appreciation  in  the  last 30 years. The other  instances of more  than 2% monthly
appreciation were in Oct?01, Nov?04 and Nov?09. 

?  Average  annual  PRs/US$  deval  has been  6.5%  in  the  last  30?years. Of  these,  in
only two years (2002 and 2003) has the PKR appreciated against the USD.  In ten
of the last thirty years, Rupee has fallen by more than 10% against the USD. 

?  The  recent  reversal  in  PKR  fortunes  has  been  on  the  basis  on  marginal
improvement  in FX  reserves, yet  there has been no major  change  in balance of
payments  outlook.  In  our  opinion,  fundamentals  do  not  support  sustained
appreciation. 

?  We continue to expect the PKR/USD parity to reach 112 by June?14. 

KASB

Temporary Political Measure cant harness National Economy WE see USD around 112 in near future though Gen Public can get Scared but they are very few and holding some chunks only the Currency Dealrs would have Maximum Benefit of this Game, Good Luck :fingerscrossed1:

The FACT is a FACT ......... PKR/USD are currently at parity of 112 and would stay as such, Good Luck
Title: Re: Exchange rate weakness & KSE-100
Post by: GlobalInvestor on August 25, 2014, 12:21:46 PM
Macro: Currency appreciation unlikely to sustain
?  Pakistan's currency has appreciated by 2% in Dec?13, the fourth highest monthly
appreciation  in  the  last 30 years. The other  instances of more  than 2% monthly
appreciation were in Oct?01, Nov?04 and Nov?09. 

?  Average  annual  PRs/US$  deval  has been  6.5%  in  the  last  30?years. Of  these,  in
only two years (2002 and 2003) has the PKR appreciated against the USD.  In ten
of the last thirty years, Rupee has fallen by more than 10% against the USD. 

?  The  recent  reversal  in  PKR  fortunes  has  been  on  the  basis  on  marginal
improvement  in FX  reserves, yet  there has been no major  change  in balance of
payments  outlook.  In  our  opinion,  fundamentals  do  not  support  sustained
appreciation. 

?  We continue to expect the PKR/USD parity to reach 112 by June?14. 

KASB

Temporary Political Measure cant harness National Economy WE see USD around 112 in near future though Gen Public can get Scared but they are very few and holding some chunks only the Currency Dealrs would have Maximum Benefit of this Game, Good Luck :fingerscrossed1:

The FACT is a FACT ......... PKR/USD are currently at parity of 112 and would stay as such, Good Luck

It seems getting realized with lot of pressure from IMF for getting USD aligned as per their Agreement.  :fingerscrossed1:
Title: Re: Exchange rate weakness & KSE-100
Post by: SBM on August 25, 2014, 01:49:40 PM
IMF nay kia pressure deyna hai
Kindly remember central banks are rarely able to keep their currencies strong for long, especially banks with low foreign reserves like ours.
I believe it was the speculative forces that kept the rupee so strong for this long as there were expectations of significant inflows. However, with current political uncertainty, one thing is clear, economic reforms + privatizations & FDI wont be as much and/or come as quickly as was being bet. 
Title: Re: Exchange rate weakness & KSE-100
Post by: MZ on August 26, 2014, 04:19:48 PM
AKD Daily
 
Pakistan Market: Nuances of PkR weakness
The PkR shed 1% vs. the US$ yesterday, after recovering from an intraday decline of 2.1%, to bring FYTD depreciation to 2.3%. While there could be an element of speculation attached to recent currency weakness, and the SBP has alluded to this, the continuing political impasse is certainly having an impact. This has the potential to influence the SBP's policy rate decision where even projected Aug'14 CPI of 7.3%YoY may not be enough to guarantee a rate cut in the Sep'14 MPS. At the same time, while nascent currency pressures could well prove to be transitory, we eye medium-term risks if macro reforms turn sluggish. After the PkR's 0.2% appreciation vs. the US$ in FY14, slower reforms could mean a return to the historical 5%-6%pa. depreciation run rate. Within this backdrop, we flag E&P, IPPs, Textiles and Telecoms as sectors that may see a +ve earnings impact from a weaker PkR. On the flipside, a weaker PkR holds negatives for OMCs, Autos and Pharmas.

Inflation preview: We expect CPI to increase by 0.6%MoM in Aug'14 where the sequential increase comes due to sticky food prices post Ramadan. However, due to a high base, Aug'14 CPI should clock in at a sedate 7.3%YoY, the lowest since Jun'13. This will bring the 8MCY14 CPI average to 8.2%YoY while the full-year CY14 CPI average appears to be headed towards 8%YoY. Considering the DR has remained unchanged at 10% in this calendar year, the CPI trend suggests the SBP has room to reinitiate monetary easing in the Sep'14 MPS. That said, the central bank may be influenced by recent PkR weakness to maintain a cautious stance. This contrasts with our base-case view that the DR could come off by 100bps across the course of FY15.

Nascent BoP concerns: The Jul'14 CA deficit has clocked in at US$454mn vs. US$125mn in Jul'13 and US$135mn in Jun'14 with the deterioration occurring on the back of a wider trade deficit (exports: -13%YoY; imports: +10%YoY). Together with IMF repayments, Pakistan's fx reserves have come off by 2.7% from their CYTD high to US$13.9bn at present (import cover: 3.7m). With the rise in political noise, the PkR has shed 2.2%MTD vs. the US$ which has trimmed CYTD appreciation to 4.4% (FYTD the PkR has now weakened by 2.3%). While recent pressure on the currency has dovetailed with the rise in political temperature, risks to the pace of medium-term macro reforms even if political noise subsides suggest that the PkR could continue to weaken. Besides potentially influencing the policy rate decision, there are earnings implications at the corporate level (table below shows impact for every 1% change in PkR/US$ parity).       

Investment perspective: We reiterate a cautious stance on the Pakistan Market where we would wait for the political situation to defuse before taking fresh positions. For an existing portfolio, we would recommend a mix shift towards defensive, currency hedged plays with a particular liking for E&P and IPPs. Preferred plays within this theme include OGDC, PPL, HUBC, KAPCO, FFC, FFBL and PTC. On the flipside, a weaker PkR holds negatives for OMCs, Autos and Pharmas where investors could choose to book profits. 
Title: Re: Exchange rate weakness & KSE-100
Post by: MZ on September 23, 2014, 06:18:37 PM
Policy of strong PKR now showing its affect on trade numbers

The external account weakness which was witnessed in the month of July continued in the month of August as well. Current account deficit number for August clocked in at USD0.6bn versus revised deficit of USD0.77bn in July. The dip has come about mainly due to receipt of CSF inflow in August. 2MFY15 current account deficit numbers now stand at a hefty USD1.37bn as opposed to USD0.58bn witnessed in the CPLY, mainly due to 55% jump in trade deficit. With contribution from Capital account remaining negligible, Financial account in 2MFY15 did rise to USD0.45bn versus USD0.19bn in CPLY.

The policy of strong PKR adopted since Mar-14 seems to be negatively affecting the current account as imports have risen, while exporters are finding it hard to compete with regional competitors. The monthly trade deficit of FY15 has risen to USD2.1bn versus FY14’s monthly trade deficit of USD1.4bn, resulting in reserves depletion. The weakness prevalent in PKR since last month due to political noise bodes well for lowering the trade deficit in our view. With SBP reserves now falling below the USD14bn mark, we expect further attrition till the government is able to launch OGDC’s GDR and Sukuk Bonds in the next month.

Taurus Research
Title: Re: Exchange rate weakness & KSE-100
Post by: MZ on September 30, 2015, 05:21:54 PM
AKD Daily
 
Pakistan Economy: Exchange rate  - Elephant in the room

Pakistan’s exchange rate has seen considerable upwards revision since last year, as the economy recovered from a meek external liquidity position, strengthening by 5% against the US$ in CY14. In Pakistan’s case, a strong PkR holds multiple implications because while the economy benefits from relatively cheaper imports (positive impact on CPI), corporations with sizable exports (such as textiles which account for >50% of Pakistan’s exports) lose ground in terms of competitiveness. That being said, we project the PkR/US$ to undergo measured depreciation (avg. 2.3% p.a. in the next three years vs. 2.5% in the previous three years) as global dynamics continue to weigh and episodes of volatility can re-emerge from uncertainties over: 1) regional currency outlook, 2) US fed rate decision and 3) domestic lobbying to enhance export competitiveness. We forecast PkR/US$ parity to average PkR105/US$ (interbank) in FY16E (3.2%YoY depreciation). We see comfort on equity market performance (weak historic correlation of negative 30% between index performance and PkR/US$ movements) while tailwinds from a relatively weaker PkR should benefit sectors such as Textiles (NML), Power (HUBC, KAPCO) and Oil & Gas (OGDC).
PkR Outlook – Measured Depreciation: We forecast PkR/US$ parity to average ~105/US$ in FY16E (3.2YoY% depreciation) with annual depreciation to average 2.3% during FY16E-FY18F, escalating to 5%YoY thereafter. We derive our estimates based on time-series econometric regression analysis accounting for key drivers, primarily: 1) fx reserves, 2) inflation differentials and 3) interest rates. Downward pressures can emanate from: 1) expectations of stronger US$ performance, 2) regional currency volatility and risks of competitive devaluation across the region, 3) higher debt servicing over the medium term, and 4) inflationary pressures re-emerging from next year. While pressures for state enforced depreciation to aid trade competitiveness remain, we expect limited interference from the government where a weaker PkR can: 1) erode benefits of low oil prices (lost savings of PkR40bn in FY16E oil imports for every 1% PkR/US$ depreciation) and 2) negatively impact expected US$1bn Eurobond and Sukuk issuance in FY16 as well as planned privatizations. Additionally, we have constructed the PkR’s REER Index which also implies that the PkR is misaligned over its fundamental levels, underscoring our case for measured depreciation going forward.
Implications: Our forecast of measured currency depreciation holds multiple implications for the economy and stock investors. Despite providing short term relief due to lack of coherent policies to improve trade sector development, PkR/US$ depreciation can be positive for the country’s export competitiveness. On the flip side, a stable BoP position accompanied with a comparatively less vulnerable currency can be beneficial for the attraction and retention of foreign flows. With fx reserves and other external account indicators on a positive trend, we anticipate foreign investor interest in Pakistan to sustain.         .
Investment Perspective: We see comfort on equity market performance (weak historic correlation of negative 30% between index performance and PkR/US$ movements). Moreover, companies which have US$ hedged revenue streams stand to materially benefit. In this backdrop, we believe export based sectors such as textiles should benefit as a weak PkR can help gain some lost ground on the competitiveness front. Similarly, the energy sector (e.g. E&P and IPPs) with its US Dollar based revenue streams (combined 20% of total revenues at the KSE-100) should receive a boost from weakness in the PkR. Playing this theme, we recommend taking exposures in NML (TP: PkR167/share), HUBC (TP: PkR107/share), KAPCO (TP: PkR89/share) and OGDC (TP: PkR175/share).
Title: Re: Exchange rate weakness & KSE-100
Post by: MZ on May 12, 2016, 06:03:56 PM
AKD Daily
 
Exchange Rate: Concerns can prop up beyond CY16
The PkR/US$ has depicted commendable stability in the ongoing year averaging PkR104.7 to reflect a marginal decline of 0.05%CYTD against the dollar. This has remained a function of: 1) weak dollar dynamics (DXY down 4.65%CYTD), 2) strong fx reserves countering BoP weakness and 3) ramp up in the FE-25 import financing facility (1QCY16 avg. utilization at US$1,438mn vs. CY15 avg. of US$749mn). Over the immediate term we see the PkR/US$ maintaining its stability, with projection for interbank rate to average PkR106.2 in CY16. That said, pressures on the Rupee are expected to emerge from start FY17 on account of: 1) higher inflation and potential reversal in monetary cycle and 2) greater BoP vulnerability to oil price shock where we now expect PkR to depreciate by 3.8%/4.0% (against earlier expectation of 2.4%) in FY17F/CY17F averaging at PkR108.5/PkR110.1. Fx reserve stability (before repayments start in May'17) however will help to restrict pressures on the PkR in the coming fiscal year.       .
PkR/US$ parity stable: After an episodic weakness in Aug'15, the PkR/US$ parity has largely stood its ground with FYTD/CYTD depreciation at a limited 2.85%/0.05% (avg: PkR104.3/104.7). The currency's strength has primarily been a function of: 1) weak dollar dynamics (DXY down 4.65%CYTD) prompted by US Fed's more dovish outlook this year, 2) fx reserves largely maintaining levels on account of foreign loans and IMF program to counter BoP weakness from rising trade deficit (up 23%YoY in 4MCY16) and deceleration in remittances (4.5%YoY in 4MCY16) and 3) ramp up in the FE-25 import financing facility (1QCY16 avg. utilization rising sharply to US$1,438mn vs. CY15 avg. of US$749mn). The latter has been effective to guard the PkR against sharp gains recorded by crude prices Feb'16 onwards (Arablight up ~34%CYTD), in our view.
Kerb premium - moving the other way: While PkR/US$ has oscillated in a close band, rates in the kerb market have seen significant consolidation over the past two months to stand at PkR104.7/US$. Consequently, spread between the kerb and interbank rates has shrunk drastically to PkR0.03 (0.03%) compared to its recent high of 1.5% in Dec'15. This divergence from interbank trend is expected to have been largely driven by greater regulatory crackdown on local dealers to ensure adequate dollar supply in the market. Going forward, the kerb market is likely to see revision over the short term on periodic dollar demand near Ramadan and Eid season, albeit we expect the kerb premium to stay restricted on tighter regulatory control.
Rupee outlook - vulnerabilities to emanate from BoP: Over the immediate term we see PkR/US$ maintaining its stability, where we reiterate our projection of interbank rate to average PkR106.2 in CY16. That said, pressures on the Rupee are expected to emerge from start FY17 on account of: 1) higher inflation trajectory (FY17F CPI inflation avg. : 5.5%YoY) and potential reversal in monetary cycle (room for 50bps hike in 4QCY16), 2) BoP risks coming into play in case of further recovery in global oil prices. Regarding the latter, while Pakistan has benefited from tailwinds of low petroleum prices so far, the BoP front is now more vulnerable to oil price shocks with non-oil imports rising sharply (up 32%YoYFYTD), deceleration in remittance growth and exports recovery remaining unlikely in the near term. Within this backdrop, continued ascent of crude prices can prove to be a major risk. However, strong fx reserve position is likely to act as the  prime mitigating factor which though contingent on materialization of project and multilateral loans (GoP projects PkR4.7bn flows in FY17) should lend support to the Rupee in FY17 before major debt repayments kickoff. Incorporating the same, we project FY17F/CY17F PkR/US$ rate to average PkR108.5/PkR110.1 (based on time series regression analysis on fx reserves, inflation and interest rate differentials). Major risks to thesis remain exogenous shocks from earlier than expected recovery in dollar. driven by US monetary policy.
Title: Re: Exchange rate weakness & KSE-100
Post by: Valueestimator on May 12, 2016, 07:12:46 PM
currency will depreciate once imf loan will be fully disbursed. so far dollar keeps coming.
Title: Re: Exchange rate weakness & KSE-100
Post by: MZ on December 07, 2016, 09:21:37 PM

AKD Daily
 
Pakistan Economy: Rupee dodging dollar bulls
 
The US FOMC is largely anticipated to increase the fed rate in its upcoming monetary review next week (Dec 13-14'16) that coupled with a surge in inflationary expectations post Trump victory has pushed the greenback to its 14yr high (dollar index up 3.7%MoM). Within this context, the upcoming meeting retains particular importance as Fed's economic projection for future rate trajectory can alter the dollar outlook. While most regional currencies have dipped vis-à-vis US$ (2.1%MoM avg. depreciation), the PkR/US$ parity has held its ground. Moreover, GoP's ongoing drive to normalize kerb-rates (recovery up to PkR106.5) is a strong signal of its policy to maintain currency stability. However, going forward we see room for limited depreciation (FY17 avg. projection at PkR106.2/US$) with determinants for the same being: 1) exports weakness amid lower currency competitiveness in the region, 2) higher oil prices adding to import bill and 3) potential delays in foreign debt flows to support fx reserves.
 
Dollar outlook retaining FOMC relevance: The US FOMC is scheduled to deliberate its monetary policy statement next week (Dec 13-14), with the likely outcome being a 25bps hike (fed funds futures indicated probability at 100%) - the second since the lift-off one year ago. Room for surprise remains limited following: 1) Fed's guidance in its Nov'16 review and 2) promising US economic data with encouraging employment report being the most recent reaffirming factor in this regard (4.6% unemployment rate at lowest since Aug'07). This coupled with higher expected inflation under Trump's presidency has helped the dollar reach its 14yr high (CYTD DXY: up 3.7%MoM). While a hike this month looks certain, further increases next year remain hard to predict (futures indicate another hike unlikely till Jun'16) and largely dependent on fiscal policy under the new administration. Within this context, the upcoming meeting retains particular importance as Fed's economic projection for future rate trajectory may alter the outlook for the greenback.
 
Rupee - keeping dollar strength at bay: Despite the interbank PkR/US$ parity remaining stable, kerb rates have fallen sharply with the premium peaking at 2.64%, to reflect: i) regional currency weakness (down avg. 2.1%MoM) and ii) higher dollar demand particularly after India's demonetization drive. While the trend reflects intrinsic Rupee weakness, GoP's recent drive to control open-market rates, pushing recovery up to PkR106.5/US$ since mid-last week, is a key signal of its policy to maintain exchange rate stability. However, a bullish outlook for the greenback as shaped by expectations about the US fed rate, remains a key risk going forward and is likely to trickle through to the local market, where recurrence of kerb-market volatility is probable. Along with a stronger dollar, determinants for timing of depreciation in the interbank market are: 1) current exports weakness and pace of recovery post-announcement of much-awaited exports relief package, 2) higher oil prices ($5/bbl over our US$45/bbl assumption adds US$0.8-1bn to the annual import bill) and 3) continuance of foreign debt flows to support fx reserves. We maintain our PkR/US$ FY17 avg. projection at PkR106.2 on account of expected slippages in the aforesaid factors next year.
Title: Re: Exchange rate weakness & KSE-100
Post by: MZ on June 29, 2017, 03:41:46 PM
Elixir Insight


Pakistan Economy

         CAD widened by 2.78x YoY to USD8.93bn in 11MFY17 owing to 14% YoY jump in imports and stagnant remittances / exports growth. On monthly basis, CAD jumped 28% MoM to USD1.58bn in May’17 lead by 13% MoM jump in imports in spite of 9% MoM / 18% MoM growth in exports / remittances.

·         While FDI grew by 23% YoY to USD2.03bn in 11MFY17, it remained relatively miniscule in comparison with widening CAD to support BOP. On monthly basis, FDI grew by impressive 153% YoY / 124% MoM to USD295mn.

·         CAD is not expected to show significant improvement in near term on account of increased machinery imports related to CPEC projects and stagnant exports/remittances. Thus, we believe that CAD would continue to pressure already strained FX reserves and it is a question of when the next spurt of currency depreciation materialize.

·         We target PKR at 111-114 by the end of FY18

CAD widens 2.78x YoY: According to SBP’s recently released Balance of Payment (BOP) data, Current Account Deficit (CAD) has grown 2.78x YoY to USD8.93bn in 11MFY17 vs. USD3.21bn in 11MFY16. This has been a result of (1) 14% YoY growth in imports (USD50.36bn in 11MFY17 vs. USD44.18bn in 11MFY16), (2) remittances dropping by 2.13% YoY (USD 17.46bn in 11MFY17 vs. USD17.84bn in 11MFY16, and (3) flatter exports down 1% YoY to USD24.92bn in 11MFY17 vs. USD 25.14bn in 11MFY16.

Jump in imports has been primarily attributable to surge in machinery imports (particularly related to power generation) and petroleum imports (owing to increased demand for POL products and increased import of LNG). Whereas remittances have remained under pressure primarily due to 3% YoY decline in remittances from GCC countries (constituting 63% of total remittances) as the oil dependent economies bear the brunt of lower oil prices. On monthly basis, CAD jumped 28% MoM to USD1.58bn in May’17 vs. USD1.23bn in Apr’17 lead by 13% MoM jump in imports (USD5.40bn in May’17 vs. USD 4.77bn in Apr’17) in spite of 9% MoM / 18% MoM growth in exports / remittances (USD2.33bn / USD1.87bn in May’17 vs. USD2.14bn / USD1.54bn in Apr’17).

FDI growth falls behind its potential: FDI grew by 23% YoY to USD2.03bn in 11MFY17 vs. USD1.65bn in 11MFY16. Nonetheless, it remained relatively miniscule in comparison with widening CAD, to support BOP. Chinese foreign investment which constituted 43% of total FDI grew by 34% YoY to USD921mn in 11MFY17 vs. USD657mn in 11MFY16. However, this amount significantly lags behind the potential entailed in USD57bn CPEC projects. On monthly basis, FDI grew by impressive 153% YoY / 124% MoM to USD 295mn vs. USD116mn / USD132mn in May’16 / Apr’17.

BOP/Currency Outlook: CAD is not expected to show significant improvement in near term on account of increased machinery imports related to CPEC projects and stagnant exports/remittances. In this regard, the Real Effective Exchange Rate (REER) has reached record high level of 127.4 (indicating PKR to be overvalued by 27.4% against the basket of trade weighted currencies).

However, we would like to highlight that it is due to (1) shortcoming in methodology not accounting for real interest rates, and (2) structural changes in (heavyweight trading partners) EU/UK economies translating into slide in EUR/GBP owing to low interest rate policy/Brexit, respectively. On the other hand, the Real Bilateral Exchange Rate (RBER) against USD stands at 109 (indicating PKR to be overvalued by 9% against USD). Based on this methodology, fair value of PKR/USD exchange rate stands at 114, compared to last closing inter-bank rate of PKR104.8/USD.

While Rupee has recently sustained the pressures and has remained stable for the last two years, it should be noted that Pak Rupee has historically remained stable for months and then exhibits a sharp spurt to overcome the brewing pressures in BOP. We thus believe that based on the ongoing strain on CAD and the resultant pressure on FX reserves, it is a question of when the next spurt of currency depreciation materializes; which may be around the next general elections due in 4Q/FY18. We thus target Pak Rupee at PKR111-114 by end of FY18.
Title: Re: Exchange rate weakness & KSE-100
Post by: sAr on July 05, 2017, 03:46:01 PM
• During the trading hours today, PKR/USD interbank exchange rate has depreciated by 3.2% to 108.3 (touching a high of 108.5) from 104.9 yesterday.
•         While we are anticipating depreciation spurt of 6-9% during FY18 (refer to our daily: “Currency Depreciation Lurking Amidst Deteriorating BOP” dated 29th Jun’17), today’s slide has been surprising given no material development in recent days. In our view, PKR’s overvaluation (9% vs. USD based on RBER) and pressure on FX reserves due to deteriorating BOP were the main reasons behind today’s fall in exchange rate.
•         Sectors that will be positively impacted include Oil & Gas Exploration (on the back of USD denominated revenues), Independent Power Producers (driven by USD based tariff) and export driven industries (Textiles, Meat)
•         On the other hand, Automobile Assemblers, Cement and Steel sectors are likely to be negatively impacted from PKR depreciation. 40-60% of Auto Assemblers’ direct costs is denominated in foreign currencies but given a robust demand outlook, a sustained weakness in PKR is likely to allow the companies to pass on the cost pressure via increased prices. On the flip side, local assemblers will enjoy a more competitive environment against imported reconditioned cars.
•         Imported coal accounts for 25-30% of COGS for cement manufacturers. Every 1% depreciation in PKR (over and above our depreciation assumption) erodes the sector margins by 10-20bps which has a annualized bottomline impact of 0.8-1.0% (which is partially mitigated by exports).
•         Raw material (steel scrap) imports constitute ~60% of Amereli Steel’s (ASTL) COGS. We estimate that every 1% depreciation in PKR (over and above our depreciation assumption) results in ~PKR0.25/share (4%) impact on annualized EPS.
•         Amongst other stocks, 60-65% of COGS for Pak Elektron (PAEL) are denominated in foreign currency; in case of failure to pass through cost pressures, every 1% depreciation in PKR (over and above our depreciation assumption) results in ~PKR0.3/share (3.5%) impact on annualized EPS.
•         As highlighted in our Strategy Note for FY18 (released July 3, 2017), we maintain our bullish stance on sectors that derive returns from US Dollar and maintain PPL, MARI, OGDC and HUBC amongst our top picks.

Elixir Research
Title: Re: Exchange rate weakness & KSE-100
Post by: Shakir123 on July 05, 2017, 03:58:58 PM
Wht abt nrl and Aisha
Title: Re: Exchange rate weakness & KSE-100
Post by: Farzooq on July 05, 2017, 05:10:08 PM
PKR/USD touches 108.20/108.4 in inter-market:
 
Panic started to set in the FX market today as the long anticipated weakness in PKR/USD parity started to materialize. In this regard, PKR/USD exchange rate parity touched 108.20/108.4 in the inter-market, representing a 3.3%DoD depreciation. Regional currencies had depreciated by 4% - 8% over the last 12 months while PKR stood its ground, making the country’s exports uncompetitive in the global market. The pressure had been building on the federal government to rationalize the exchange parity in wake of significant build up in CAD over the last couple of years.  An abrupt movement in exchange rate will have a mixed impact on the listed sector details of which are mentioned below.
 
?   Banks-Positive: Country’s banking sector is set to benefit from the depreciation in PKR. This benefit is likely to be two pronged. Firstly, if as expected, PKR continues to lose ground, banks are likely to realize higher income from trading in the foreign currency, a head where they disappointed last year as USD stood firm ~PKR105. On a more sustainable basis, headwinds on the exchange parity will also result in country “importing inflation” and that will further mitigate the case of a pick-up in DR, thus further strengthening the investment case of the banks. In this backdrop, we prefer banks with i) higher portion of CA (as they don’t get re-priced at higher rates) and ii) higher ADR (where the asset is linked to a benchmark rate). However, the immediate impact of a hike in DR is slightly negative as the liabilities linked to DR will be immediately re-priced to a higher rate while the assets get re-priced with a lag.
 
?   E&P’s-Positive: The sector is likely to be one of the prime beneficiaries of the currency devaluation given sales of the sector are benchmarked to USD. Furthermore, cash reserves in foreign currency deposits will enable them to recognize a one-off of revaluation gain.
 
?   Power-Positive: BIPL power universe is a net beneficiary of PKR/USD depreciation with an earnings impact of around 2% to 3% for every 5% depreciation of Pak rupee against US dollar. However, increase in electricity cost due to currency depreciation can also be expected to increase the quantum of circular debt, leading to arise in penal income.
 
?   Textiles-Positive: Textile sector, the main FX generating sector for the country, is likely to be the key beneficiary of adverse movement in exchange rate. To mention, 55% - 60% of country’s total exports are textiles which will benefit from i) exchange gains ii) increased competitiveness of the local exporters in the international market and iii) higher retention prices in PKR. In this regard, we expect NML and GATM to be the biggest beneficiaries with a higher concentration of exports in their total top-line.
 
?   Fertilizer-Positive: Currency depreciation will result in higher margins on exports which may assist in making exports viable again. Furthermore, higher cost of RLNG will reduce the competitiveness of LNG based players. Both these factors may assist in reducing the inventory glut in the market. To note, the development is beneficial for FFBL since higher PKR/USD will increase the cost of imported DAP fertilizer, allowing FFBL to increase its prices and therefore DAP margins.
 
?   Steel-Positive in Long-term/Negative in Short-term: Even though depreciating local currency will be positive for steel manufacturers in long term on the back of higher translated primary margins but it will negatively hit the industry in short term on account of hefty exchange losses amid import of scrap and HRC.
 
?   Cement- Increase in Cement price Positive/ Currency Depreciation Negative: As per our channel checks, cement prices in local market has increased by PKR 20/bag in north and PKR 15/bag in south. The rationale for increase in prices is to pass-over the impact of increase in FED on cement effective from Jul-17. To recall, FED on cement was raised to PKR 1.25/kg from PKR 1.0/Kg in Federal Budget FY18. This implied an incremental cost of PKR12.5/bag excluding GST.
 
On the other hand, depreciating PKR will negatively impact the cement industry in terms of exchange losses on coal import. Similarly, cement players utilizing FO based captive power plant for power generation will also take a hit from exchange rate reversal. 
 
?   OMC’s-Negative: Marketing companies will be amongst the losers amid sever threat of exchange losses to the industry. Furthermore, higher USD/PKR will translate into higher fuel prices, thereby threating a slowdown in sales growth.
 
?   Auto’s- Negative: The sector will be prime sector affected by the ongoing depreciation since majority of its cost is imported materials. However, the industry is likely to pass on the cost pressures upto a certain level. Also, SBP had restricted companies from hedging USD/PKR exposure where auto industry faces risk of significant exchange losses.
 
?   Pharmaceuticals-Negative: Pharmaceutical sector of the country is likely to be one of the biggest losers of the abrupt movement in exchange rate as the sector imports majority of its raw materials where the imports are denominated in USD. This will result in the erosion of margins of the pharmaceutical sector unless the regulator allows the companies to pass on the pricing pressures on to the end users. This seems unlikely as the prices are increased through a pricing formula where the prices are increased by 50% - 70% of inflation.
 
?   Telecommunications-Negative: PTCL is expected to be a significant loser because of the depreciation in PKR as its subsidiary PTML holds a USD denominated loan it took to purchase 3G license. The hit is however not going to be realized in 2Q as the currency remained stable until 30th June.
Title: Re: Exchange rate weakness & KSE-100
Post by: MZ on July 05, 2017, 07:35:41 PM
Flash Note


Pakistan Equity Market

Pak Rupee Depreciation Finally Kicks In
 
·         During the trading hours today, PKR/USD interbank exchange rate has depreciated by 3.2% to 108.3 (touching a high of 108.5) from 104.9 yesterday.

·         While we are anticipating depreciation spurt of 6-9% during FY18 (refer to our daily: “Currency Depreciation Lurking Amidst Deteriorating BOP” dated 29th Jun’17), today’s slide has been surprising given no material development in recent days. In our view, PKR’s overvaluation (9% vs. USD based on RBER) and pressure on FX reserves due to deteriorating BOP were the main reasons behind today’s fall in exchange rate.

·         Sectors that will be positively impacted include Oil & Gas Exploration (on the back of USD denominated revenues), Independent Power Producers (driven by USD based tariff) and export driven industries (Textiles, Meat)

·         On the other hand, Automobile Assemblers, Cement and Steel sectors are likely to be negatively impacted from PKR depreciation. 40-60% of Auto Assemblers’ direct costs is denominated in foreign currencies but given a robust demand outlook, a sustained weakness in PKR is likely to allow the companies to pass on the cost pressure via increased prices. On the flip side, local assemblers will enjoy a more competitive environment against imported reconditioned cars.

·         Imported coal accounts for 25-30% of COGS for cement manufacturers. Every 1% depreciation in PKR (over and above our depreciation assumption) erodes the sector margins by 10-20bps which has a annualized bottomline impact of 0.8-1.0% (which is partially mitigated by exports).

·         Raw material (steel scrap) imports constitute ~60% of Amereli Steel’s (ASTL) COGS. We estimate that every 1% depreciation in PKR (over and above our depreciation assumption) results in ~PKR0.25/share (4%) impact on annualized EPS.

·         Amongst other stocks, 60-65% of COGS for Pak Elektron (PAEL) are denominated in foreign currency; in case of failure to pass through cost pressures, every 1% depreciation in PKR (over and above our depreciation assumption) results in ~PKR0.3/share (3.5%) impact on annualized EPS.

·         As highlighted in our Strategy Note for FY18 (released July 3, 2017), we maintain our bullish stance on sectors that derive returns from US Dollar and maintain PPL, MARI, OGDC and HUBC amongst our top picks.
Title: Re: Exchange rate weakness & KSE-100
Post by: Deep_Value on July 05, 2017, 07:47:04 PM
Flash Note


Pakistan Equity Market

Pak Rupee Depreciation Finally Kicks In
 
·         During the trading hours today, PKR/USD interbank exchange rate has depreciated by 3.2% to 108.3 (touching a high of 108.5) from 104.9 yesterday.

·        .........................

·         Amongst other stocks, 60-65% of COGS for Pak Elektron (PAEL) are denominated in foreign currency; in case of failure to pass through cost pressures, every 1% depreciation in PKR (over and above our depreciation assumption) results in ~PKR0.3/share (3.5%) impact on annualized EPS.

·         As highlighted in our Strategy Note for FY18 (released July 3, 2017), we maintain our bullish stance on sectors that derive returns from US Dollar and maintain PPL, MARI, OGDC and HUBC amongst our top picks.

So ppl will stop buying PEL refrigrator and what is the other option to buy imported one whouldn't that be expensive again due to devaluation of currency???? No wonder if this analyst will selling his cycle to buy PAEL shares at this rate.
Title: Re: Exchange rate weakness & KSE-100
Post by: MZ on July 05, 2017, 09:22:45 PM
(https://scontent-mxp1-1.xx.fbcdn.net/v/t1.0-9/19702054_1602362343141197_2243062273160262600_n.jpg?oh=f9dbf2a09efbda5cad790f27ba0eea69&oe=5A0724F0)
Title: Re: Exchange rate weakness & KSE-100
Post by: leo_kool on July 06, 2017, 10:45:55 AM
today's rate ?
Title: Re: Exchange rate weakness & KSE-100
Post by: leo_kool on July 06, 2017, 11:04:18 AM
Back to 105!!!! .............. Dar Sb nay control karlya.....elections k baad hi ya panama verdict (in case against ) k baad hi increase hoga.....
Title: Re: Exchange rate weakness & KSE-100
Post by: Farzooq on July 06, 2017, 12:55:27 PM
Pakistan Strategy: Acknowledgement of External woes; currency move not a blip
We believe a single day big move in Rupee-Dollar parity (3.19%, highest move since Aug’08) is well grounded and fundamental, though the bold move from thee central bank defies earlier expectation of continuation of tight currency control.
The damage control exercise by Ministry of Finance in the form of meetings of heads of commercial banks may cause rupee to nominally recover and stabilize the sentiment in open market. We rule out the possibility of reversal of this adjustment, though partial recovery can not be ruled out.
We positively view a much-needed adjustment at the start of the fiscal year, coupled with other import measures, which will likely restrict import growth.
That said, we highlight the currency move is well within our estimate (5-5.5% devaluation) and does not disturb our CPI and corporate earnings growth estimates for now. We don’t rule out similar such big moves in coming quarters.
E&Ps, IPPs, Textile, IT Export and Fertilizer are key beneficiaries of rupee devaluation, while  pricing power will be tested for manufacturing sectors (Cement, Autos, Steel, listed dairy consumers). Neutral for OMCs, Refineries, Banks, Auto parts, Insurance, and Consumers.
Acknowledgement of external woes - currency move not a blip! The latest press release by central bank on yesterday’s sharp exchange rate move of 3.19% to PKR108.25 and revision made in the external sector data comes in as a bold move which could have several implications, in our view. Meanwhile, damage control measures from Finance Ministry (meetings with banks’ Presidents due today) are expected to continue which should serve to bring more stability in the open market (PKR dipped to 109.4 intra-day yesterday, down 3.2%). SBP’s apparent endorsement of a new trading band for the currency is another step to increase import cost, clearly acknowledging the worsening external account position and curbing further FX pressure. Recall the central bank imposed 100% cash margin on some imports in 3QFY17 in a bid to restrict import bill. The move followed increase in Regulatory Duty/Import Duty on over 586 items, mostly luxury in nature, in the latest budget. We see several possible implications including:(i) another round of devaluation cannot be ruled out, and (ii) SBP backing its move by reinforcing that it will be closely monitoring the FX market vis a vis pressure from Finance Ministry indicates that the exchange rate will be managed going forward (thus any sharp sentiment-driven exchange rate move to follow could scale back).

Merits and perils: While the implications on macro are dependent on magnitude of devaluation of currency in next few months, direct impact on some of the indicators cannot be ignored:

#1 Addressing worsening trade deficit: The impact on non-fuel and machinery import could be crucial to restrict the import growth bill. Though much needed for export growth, its merits may be limited and dependent on PKR moves with other currencies.

#2 Increase in Public debt: In addition, pressure on external debt to GDP remains unabated. Currency weakness of 3.2% implies an increase in public debt in terms of PKR by ~PKR214bn or 0.67% of GDP (given public external debt stands at USD61.95bn as of Mar’17). Looking ahead, an expected increase in net public external debt by USD5bn would potentially add 1.5% of GDP in FY18.

#3 Exchange rate and CPI inflation strongly correlated though see minimum near-term impact: Impact of exchange rate on the CPI inflation will be closely tracked, however soft oil price trend and absence of fuel adjustment in power tariffs in the CPI basket are likely to have minimum impact on near-term CPI readings. Second round impact is likely to come into effect at least with a quarter lag, as manufacturers with stronger pricing power raise prices, though a concurrent seasonal drop in food prices in 2Q could help in offsetting the impact.

Revision in import bill related to power and energy sector: The latest revision in Balance of Payments (BoP) data by SBP to include permissible offshore FX transactions mainly in the energy and power sectors prompt a revision in our estimate for BoP for FY18E which are currently under review. As such the crux of the revisions made by SBP revolves around increase in Current Account Deficit (CAD) by USD1.4bn/1.7bn for 11M16 and 11M17 respectively, led by higher imports (both goods and services). The imports are financed and offset by concurrent increase in private sector debt (USD0.8bn/USD1.4bn) and FDI (USD0.4bn/USD0.18bn) for the same period, recorded as inflow in the financial account. Consequently, total external debt (including private sector) as of Mar’17 now stands at USD77.6bn or 25.5% of GDP (revised up by over USD1bn) as per SBP, up USD3.8bn from Jun’16.

Mixed response from capital markets: The move in currency market had drawn a mixed response in both money and equity markets. Yields on 3-5yr bond have moved up ~5-7bps yesterday in reaction to currency move. Given our CPI estimates remains unchanged, we believe the currency move will not impact the timing of rate reversal (3Q18E). The KSE-100 index exhibited a volatile move as early gains (+2.1%) were pared back in late hour trading (KSE-100 closed flat). The equity market has understandably bid up prices for likely devaluation beneficiaries (E&Ps, IPPs, Textile, IT Export, Fertilizer which comprises ~35% of market cap of KSE-100 index) while Cement, Autos, Steel and Dairy exhibited a negative move. The currency move has brought pricing power of major manufacturing sectors in the limelight and may have modest negative impact in near-term. OMCs, Refineries, Banks, Auto parts, Insurance, Consumers (43% of market cap) will see a neutral impact on the earnings.

bma
Title: Re: Exchange rate weakness & KSE-100
Post by: buy.high.sell.low on July 06, 2017, 04:27:40 PM
Even after reading the bma report above I am mystified as to why this govt had remained hell bent on artificially keeping rupee valued so high, other than trying to prove sheikh rasheed wrong as he was decrying that the rupee will nose dive when pml-n formed the govt. The dollar has strengthened against all major currencies and this government could easily have explained the devaluation. Rupee's fair value is in 120s but the govt will lose a lot of face if it happens and at a very un opportune time as elections are less than a year away.

The only explanation that i can think of was that the black money (not necessarily govt or their cronies) in pakistan buys USD in local market at cheaper rates and parks it in offshore accounts.
Title: Re: Exchange rate weakness & KSE-100
Post by: MZ on July 06, 2017, 05:57:26 PM
AKD Daily
 
Pakistan rupee: Tipping over
 
The PkR/US$ parity depreciated in a sharp movement yesterday - the largest daily move since CY08 - with the rate closing at PkR108/US$ (~3.2% depreciation), primarily reflecting ongoing deterioration in fx reserve position due to rising trade imbalances (11MFY17 CAD 1.3xYoY higher) and slower foreign loan inflows (70% disbursement of the budgeted amount from multilateral donors in 11MFY17). While currency is expected to remain volatile, a pullback in the PkR remains likely (PkR/US$ trading at PkR106.3 intraday as per channel checks) taking cue from MoF and SBP's statements. However, over CY17 PkR is likely to consolidate around PkR106-107 with fx reserves remaining above US$19bn, in our view. Thereon, depreciative pressures are expected to build as CA dynamics worsen (FY18F: 4.5% of GDP) with import cover coming under 4m, to trigger further PkR/US$ depreciation (4.9% in FY18F). Implications on the macro front linger in the form of inflationary pressures (FY18F CPI inflation projection up by +30bps) and higher debt servicing. From the market's vantage, PkR weakness remains beneficial for Textile, E&P and IPPs while holding negative implication for Cements, Steel and Automobiles.
 
Rupee devalues - as reserves exhaust: In a sudden move, the Rupee depreciated sharply by 3.18% yesterday to close at PkR108.2/US$. As per channel checks, the devaluation is a function of decline in fx reserves limiting SBP's capacity to adequately support the currency amid a growing trade imbalance. In this regard, fx reserves have fallen by US$2.7bn from their peak in Oct'16 owing to slower project-loan inflows (70% disbursement of the budgeted amount from multilateral donors in 11MFY17). Moreover, pressures on interbank have risen considerably on account of a rapidly rising import bill with SBP's FE-25 facility to manage Rupee volatility also reaching its peak at US$1.3bn in May'17. While the SBP has resorted to short-term commercial borrowing, increase in CAD has outpaced efforts for fx reserve accretion with the deficit now standing at its highest since FY08.
 
CA outlook - dismal at best: Colliding with currency depreciation, SBP has revised BoP statistics from FY15 onwards to include transactions done through off-shore accounts in efforts to increase transparency. Consequently, CAD for 11MFY17 has been revised up to 3.4% of GDP from 2.9% reported earlier (FY16 deficit revised to 1.7% of GDP from 1.2%). The change has primarily come from an increase in Machinery imports particularly in the Power/Energy sector (likely CPEC related) with imports revised up by US$1.03bn for 11MFY17. In tandem, adjustments have been made to the financial account. On a positive note, PkR weakness is likely to help exports recovery in the coming year which incorporated along with data revision, takes FY18F CAD projection to 4.5% of GDP (from 3.8%) compared to FY17E deficit expected at 3.7%. While, this implies sharp increase in CAD, the adjustments are unlikely to have additional impact on the fx reserve position due to corresponding changes to the financial account.
 
Outlook - consolidation followed by weakness: With our projections indicating fx reserves to stabilize above US$19bn in CY17, we expect the currency to largely consolidate around PkR106-107 in remainder CY17 - though reliant on materialization of planned foreign inflows on a timely basis. In this regard, GoP's stance on currency devaluation being triggered by political uncertainty and SBP's claims to counter volatility further affirms our outlook. That said, depreciative pressures are expected to continue to steadily build up where our current account projections imply fx reserves deterioration in FY18 with the same expected to end the year around US$17-17.5bn (import cover projected at 3.9mths). This is expected to open room for further slippage in the PkR/US$ where we maintain our forecast of 4.9% depreciation for the ongoing fiscal year. That said, delay in foreign loans or a sharper recovery in international oil prices (Arablight assumed to stay below US$55/bbl) can trigger further devaluation during the year.
 
Negative implications for economic stability: Spillover effects of a weaker Rupee are likely to emanate in the form of direct pressures on the fiscal account with external debt servicing budgeted at ~8% of the year's revenue. Moreover, increasing reliance on imports for fuel and investment machinery also implies inflationary pressures, particularly in the form of higher domestic fuel prices. However, support is expected from persistent weakness in global crude prices, where the recent depreciation increases our CY17F/FY18F inflation projection by +10bps/+30bps to 4.4%YoY/5.1%YoY. While real interest rates remaining in the positive zone should allow SBP to hold interest rates at current levels till May'18 - higher than expected depreciation can open room for a nominal hike early-CY18.
 
Investment perspective: Export oriented sectors, particularly Textile, will be the key beneficiary of PkR weakness, where a stagnant Rupee has hurt competitiveness. In this regard, assuming 5% depreciation from our base case implies a positive 2.8% earnings impact on NML. E&P and IPPs with dollar-linked revenues also stand to benefit with 5% devaluation prompting 4.6%/5.7% avg. rise in FY18 earnings in our E&P and Power Universe. On the other hand, import-dependent sectors, including Automobiles, Cements and Steel face negative implications (see table on next page). In addition, select scrips (ENGRO, FFBL, EFERT within AKD Universe) with high share of foreign borrowing also face currency risks in the form of higher repayments.
Title: Re: Exchange rate weakness & KSE-100
Post by: MZ on July 28, 2017, 04:42:57 PM
Flash Note

Pakistan Strategy

SC Disqualifies PM – All Eyes on the Exchange Rate!

 
·         The Supreme Court announced its landmark ruling on the ongoing Panama case, where the larger bench disqualified Prime Minister Nawaz Sharif from his position. Moreover, news reports hint towards disqualification of sitting Finance Minister Mohammad Ishaq Dar from his position; in addition to forwarding cases against the First Family and Finance Minister to National Accountability Bureau (NAB).

·         While this ends the 273-day long proceedings of the Supreme Court, the fears of a sharp devaluation of PKR are likely to come to the fore-front now. During the first trading session,  KSE-100 had already lost 1.6% intra-day while PKR closed largely flat at PKR 105.40/45 against the greenback.

·         We believe that ever since the report released by Joint Investigation Team (JIT) on 10th July, 2017, the market had already formed a consensus that PM will be ousted. However what comes as a surprise is the possible disqualification of Finance Minister, raising serious concerns on the continuation of the rest of the cabinet and stability of the currency.

·         We re-highlight the historical impact of federal level political jolts on Pakistan equities - the last time the sitting PM was ousted from office was when Prime Minister Yousuf Raza Gilani was disqualified by the Supreme Court on 19th June, 2012 on charges of contempt of court. Since it did not lead to any major political hiccup, KSE 100 declined by a mere 0.1% / 0.2% over 1 day / 1 week post the announcement and rallied by 6.5% over 1 month following the announcement.

·         The two most notable reactions on the market were witnessed post the resignation of President Pervez Musharraf (to avoid impeachment by the National Assembly) on 18th August, 2008 and oustment of PM Nawaz Sharif (due to imposition of Martial Law) on October 12th, 1999. Refer to the table below for details.

·         On currency front, President’s Musharraf resignation in 2008 had the most notable impact where PKR lost 2.8% over the following 1 month  - however this was amidst one of the worst BoP crisis in Pakistan’s history that led to an eventual entry into IMF program.

·         We believe that the equity market reaction will largely be hinged upon the official reaction from the sitting government, whereby if they opt to choose the unlikely path of agitation then the continuation of uncertainty will  keep Pakistan equities under pressure in the near term. In case the PM concedes, and there is a smooth transition of power to another member of PML-N, then the receding uncertainty is likely to translate into a sharp rally in Pakistan equities.

·         In the meanwhile, growing concerns on PKR stability should tilt sector allocation towards industries that stand to benefit from PKR depreciation, where we once again highlight our liking for Oil & Gas Exploration and Independent Power Producers.

·         We also re-iterate our call of 6-9% depreciation of PKR over FY18, where we project the currency to close at PKR111-114 against USD.

 
Title: Re: Exchange rate weakness & KSE-100
Post by: Farzooq on August 22, 2017, 04:26:07 PM
Pakistan Economy : Sharp increase in CAD in Jul’17 warrants swift policy action

Current Account Deficit (CAD) recorded worst monthly figure of USD2.0bn in Jul’17, mainly led by faster pace of growth in trade deficit (up 78% YoY) as it surpassed remittances inflow by 1.9x vs 1.6x in 4QFY17.
Consequently, FX reserves are down sharply (USD1.5bn so far), which has overshadowed few silver linings including (i) soft oil price outlook, (ii) lower repayments due in FY18 vs FY17, and (iii) some respite in exports expected.
Policy-making challenges due to ongoing political uncertainty and rigidity on exchange rate issue, are unlikely to bode well for external account and efforts to float an international bond.
We believe an expected USD6-7bn drawdown in reserves in FY18E indicates import cover may drop down to 3.3-mths by end of Jun’18 from current 4.5-mths level.
This could trigger approx. 12% sharp devaluation in currency given historical precedence, though looking at current exchange rate policy rigidness we maintain our base case estimate of a more gradual depreciation in FY18 of 5-6% and possibly sharper devaluation in FY19E.
Jul’17 CAD at its worst monthly figure: Current Account Deficit (CAD) recorded USD2.0bn in Jul’17, marking the highest monthly deficit in many years (since FY09) vs USD1.5bn in Jun’17. While Jun’17 reflected number of seasonality driven trends (high end-of-year imports, high remittances in Eid), Jul’17 numbers in our view exclude such factors and hence fully reflect the current trend. Both drivers i.e. (i) accelerated import growth, and (ii) slowdown in remittances growth are expected to sustain in FY18, and completely overshadow few silver linings that still persist. That said, financial account which remained a key strength in FY17, ended up with only USD473mn surplus in Jul’17 due to absence of any material loan inflow (USD255mn inflow vs USD235mn repaid during the month); consequently, FX reserves fell by USD1.1bn in Jul’17.

Few silver linings in FY18…

#1 Oil prices outlook remains soft: Oil prices continue to hover around USD50/bbl, which are broadly expected to sustain on average despite recent extension in production cuts by OPEC countries as supply continues to build up. For Pak macro, soft oil price outlook remains a key positive given expectation of soaring fuel imports in line with increased economic activity. In FY17, upto 45% YoY increase in POL import volume led to approx. 30% YoY growth in value terms to USD10.9bn, supported by lower realized crude oil price (USD41/bbl) vs actual price in FY16 (USD48/bbl). While the volumetric increase may be lower in FY18 (upto 15% YoY expected), increase in realized oil price by 10% in FY18E (assuming full impact of increase in oil price in recent months to be reflected now) will likely lead to another 25% YoY growth in oil import bill to USD13.5-14bn.

#2 Repayments remain restricted: Lower external debt repayments due in FY18 (USD3.3bn) vs USD4.4bn debt repayment made in FY17 should serve as a respite to the FX reserves position in near-term. 

#3 Exports could see respite in some areas: We believe slight recovery in textile exports (benefit from higher commodity price, Euro strength, relief on cash flow side, zero rating etc) should bode well, though the scale of recovery in exports is expected to be small.

…but would likely fail to protect CAD: A mix of policy-making challenges due to ongoing political uncertainty and rigidity on exchange rate issue, could have adverse impact on the external account situation and may lead to decline in FX adequacy. Assuming exchange rate is not adjusted any time soon, some immediate measures to curb imports and strive to access some loans from commercial banks or Eurobond float will most likely be the path taken by the government in next few months. However, both political noise and concerns on exchange rate may likely remain as key concerns for foreign investors and could impact the success of floating an international bond. All in all, while Moody’s warned of credit negative events in recent months, Pakistan’s credit rating remains B3 with a stable outlook for now.

Exchange rate impact could be more pronounced: As such, foreign exchange reserves currently stand at USD19.9bn, which provides import adequacy of 4.5months. Looking at historical precedence, a simple correlation of balance of payments deficit vs currency movement in past 15 years indicates that an expected USD6-7bn drawdown in reserves in FY18E (taking import cover to an est. 3.3mnths) could trigger approx. 12% sharp devaluation in currency. However, assuming exchange rate flexibility is unlikely to be welcomed anytime soon, we maintain our base case estimate of a more gradual depreciation in FY18 of 5-6% and sharper devaluation in FY19E.

bma
Title: Re: Exchange rate weakness & KSE-100
Post by: Farzooq on August 28, 2017, 10:36:19 AM
https://www.bloomberg.com/news/articles/2017-08-28/new-pm-rules-out-devaluation-as-twin-deficits-plague-pakistan
Title: Re: Exchange rate weakness & KSE-100
Post by: Atif Ali on August 28, 2017, 11:26:35 AM
https://www.bloomberg.com/news/articles/2017-08-28/new-pm-rules-out-devaluation-as-twin-deficits-plague-pakistan
SO NO DEVALUATION OF PAK RUPEE.GOOD.
Title: Re: Exchange rate weakness & KSE-100
Post by: Farzooq on December 11, 2017, 03:08:13 PM
Dollar 109
Title: Re: Exchange rate weakness & KSE-100
Post by: SB786 on December 11, 2017, 04:23:22 PM
Dollar 109
suggestion is to clock dollar at 110-115 range, official news should be out soon.
Title: Re: Exchange rate weakness & KSE-100
Post by: msypk on December 11, 2017, 09:52:01 PM
Please guide from where we can have the latest interbank dollar rate
Title: Re: Exchange rate weakness & KSE-100
Post by: SB786 on December 12, 2017, 12:14:48 AM
Please guide from where we can have the latest interbank dollar rate
http://www.sbp.org.pk/
Title: Re: Exchange rate weakness & KSE-100
Post by: Farzooq on December 12, 2017, 10:34:07 AM
Dollar 109

Dollar 110
Title: Re: Exchange rate weakness & KSE-100
Post by: Farzooq on December 12, 2017, 05:36:00 PM
Rupee shed another ~2% against greenback in interbank market today (PKR/USD closed at 110.75).
Title: Re: Exchange rate weakness & KSE-100
Post by: orange on December 12, 2017, 05:46:00 PM
Rupee shed another ~2% against greenback in interbank market today (PKR/USD closed at 110.75).
how long will rupee take to settle
Title: Re: Exchange rate weakness & KSE-100
Post by: SB786 on December 12, 2017, 06:21:12 PM
Rupee shed another ~2% against greenback in interbank market today (PKR/USD closed at 110.75).
how long will rupee take to settle
till govt. announces devalued rate, btw there is a speculation in open market that devalued pkr will be around 110-112 which will be confirmed after open market rates have dropped to 115+.
money changers are not going above 111/- they are not taking more dollar or selling.
Title: Re: Exchange rate weakness & KSE-100
Post by: Farzooq on December 13, 2017, 03:50:49 PM
 At least a 10 to 15 percent decline would be needed to revive foreign interest in equities, according to Tundra Fonder AB, a Swedish asset manager that specializes in frontier markets.

https://www.bloomberg.com/news/articles/2017-12-13/rupee-devaluation-not-enough-to-reignite-ailing-pakistan-stocks
Title: Re: Exchange rate weakness & KSE-100
Post by: Farzooq on March 20, 2018, 11:46:59 AM
Dollar 115
Title: Re: Exchange rate weakness & KSE-100
Post by: Farzooq on March 20, 2018, 11:55:40 AM
Dollar 115

Rupee depreciates to Rs118.0 against US dollar in inter-bank market
https://profit.pakistantoday.com.pk/2018/03/20/rupee-depreciates-to-rs115-0-against-us-dollar-in-inter-bank-market/
Title: Re: Exchange rate weakness & KSE-100
Post by: Farzooq on March 20, 2018, 12:47:54 PM
Pakistan Economy: PKR Depreciation: Positive for Textile, E&P, IPPs, Chemicals and IT

Tuesday, 20 March 2018

By: Spectrum Securities (Private) Limited
 (*) Another devaluation in short time will again impact on  listed sectors as PKR depreciated by ~4% in a single day the touched to  114/USD. The devaluation of currency is positive for E&P: As its revenue is  linked with US dollar similarly positive for IPPs due to ROE indexation in USD. 

 (*) The PKR depreciation is also positive for export-oriented  sector mainly textile as its revenue and margins will improve. Similarly,  beneficial for chemicals sector as its price linked with imported chemicals.  Likewise, positive for IT sector as its major revenue is USD denominated.

 (*) However, the Rupee depreciation is negative for Autos and  Cement to some extent as a rise in the cost of imported raw material impacts  the profitability, however, ability nullify the impact. Furthermore, we expect  to further increase in policy rate in CY18.
Title: Re: Exchange rate weakness & KSE-100
Post by: Alpha on March 20, 2018, 07:21:05 PM
At least a 10 to 15 percent decline would be needed to revive foreign interest in equities, according to Tundra Fonder AB, a Swedish asset manager that specializes in frontier markets.

https://www.bloomberg.com/news/articles/2017-12-13/rupee-devaluation-not-enough-to-reignite-ailing-pakistan-stocks

Since then re shed 10% plus....
Title: Re: Exchange rate weakness & KSE-100
Post by: Farzooq on March 20, 2018, 09:30:25 PM
(https://pbs.twimg.com/media/DYvM4vSWAAA8VCN.jpg)
Title: Re: Exchange rate weakness & KSE-100
Post by: jaz on March 20, 2018, 11:02:46 PM
(https://pbs.twimg.com/media/DYvM4vSWAAA8VCN.jpg)
140  :o :o :o :down:
Title: Re: Exchange rate weakness & KSE-100
Post by: MZ on March 27, 2018, 05:22:30 PM
Pakistan Market Wrap

Closing Bell - Rangebound over 45K!

KSE-100 Index 45,004 | High 45,307 | Low 44,936 | Change -104 | Value USD49mn | Volume 104mn

Pakistan equities closed Tuesday lower with benchmark KSE100 Index settling slightly at 45K level. Market opened on a dreary note and witnessed a range-bound trading session as investors looked for positive triggers. Highlight was K-Electric KEL PA +3.6% that witnessed robust activity, accounting for ~30% of total volumes on KSE100 Index, as Shanghai Electric Power company submitted fresh public announcement of its intention to acquire 66.4% stake in the company. Among mainboards, E&Ps -0.9% and Financials -0.7% witnessed profit-taking, Cements +0.2% closed on a mixed note while Ferts +0.8% traded higher Urea and DAP sales number on YoY basis for February month.
 
We expect market to consolidate and trade rangebound in a 300-400 points range. Upcoming monetary policy announcement, newsflow on Amnesty Scheme and new exchange products (ETF) will keep investors' interest intact in the market.
Title: Re: Exchange rate weakness & KSE-100
Post by: Farzooq on June 11, 2018, 01:09:03 PM
https://www.bloomberg.com/news/articles/2018-06-11/pakistan-is-said-to-devalue-rupee-for-third-time-since-december
Title: Re: Exchange rate weakness & KSE-100
Post by: Farzooq on June 11, 2018, 01:09:53 PM
Another Hit as Trade Deficit Widens Further
Weakness in the Pak Rupee
As we write, the Pak rupee has once again witnessed a significant depreciation of 3.82% intraday against USD today
to ~121 vis-à-vis last closing of 116.55. However, we lie in wait for the currency market to close to see whether there
is adjustment by the SBP and at what level the PKR settles. We believe that the ballooning Current Account Deficit,
[which crossed the USD 14bn mark in 10MFY18 (+50% YoY)] alongside the trade deficit (which as per recent news
reports crossed ~USD 34bn during 11MFY18) to be the primary culprits for the attrition in value of the PKR. To recall,
last major movement in the parity in a single day was witnessed in Mar’18 whereby the SBP let slip the PKR against
USD by 3.60% DoD to settle at 115.00, due to similar concerns on the deteriorating external account. The table below
highlights visible PKR/USD intraday fluctuations:

Sector Impact Comment
Banks Neutral to Positive Change in exchange rate parity may lead to an early interest rate hike
Fertilizer Neutral to Positive Prices of some products (DAP) linked with import premium price
E&P Positive Revenues derived through oil prices which are denominated in USD
Power Positive ROE is indexed against PKR-USD parity
OMCs / Refinery Negative May results in foreign exchange losses due to fuel import and FX borrowings
Cement Neutral to Negative Will increase input cost (higher coal import prices), however export rupee based margins will rise
Autos Neutral to Negative High input cost (imported raw materials), however the incremental cost may be passed on
Chemicals Positive Product pricing is linked with the import parity price
Steel Neutral to Negative Higher input cost (imported raw materials), however impact likely to be passed on
Textiles Positive Cheaper PKR against USD will augment export revenues
Title: Re: Exchange rate weakness & KSE-100
Post by: MZ on June 11, 2018, 10:17:29 PM
Pakistan Economy

PKR/USD Depreciation Marks a Paradigm Shift in Policy Making
 
·         Pak Rupee (PKR) has depreciated by 3.9% during the day to 121 against the greenback, from last week’s close of 116.5. Historically the local currency has depreciated in spurts, with today’s move being the third one during FY18TD (previous ones being in Dec-17 and Mar-18), taking the cumulative depreciation to 15% over the ongoing fiscal year (compared to flattish performance during FY15-17).
·         We see recent rounds of PKR depreciation as a paradigm shift in policy making since the end of Finance Minister Ishaq Dar’s era who remained rigid on maintaining fixed exchange rates. Lately, policy makers on both fiscal and monetary sides did not oppose currency depreciation as they saw it as a tool for addressing external account vulnerabilities.
·         The currency has continued to depreciate owing to growing pressures from deteriorating external account situation, and central bank allowing flexibility in exchange rates as a go-to tool to address this economic issue since structural policies would take long to bear fruits.
·         Based on this visible change in policy action, we believe that PKR’s implied fair value to policy makers would now be hinged on Real Effective Exchange Rate (REER) rather than Real Bilateral Exchange Rate (RBER) against USD due to structural inefficiencies (export uncompetitiveness and import inelasticity)   translating into growing external account imbalances.
·         Note that after today’s move, we estimate that PKR is undervalued against USD on the basis of RBER, however we estimate it to be overvalued by 7% against USD based on REER.
·         We had so far been projecting PKR to reach 115 by Jun-18 and 120 by Dec-18; however the recent currency moves has overshot both our targets. Eyeing paradigm shift in policy making and continued pressures on external account, we project PKR/USD to depreciate by 7-12% to 130-135 by Jun-19 (FY19 end).
·         We estimate the said changes to raise our inflation forecasts by ~50bps and thus, we also revise our interest rate expectations up by ~50bps – taking Discount Rate to 8.0% by Dec-18 (shown in the table below)
Title: Re: Exchange rate weakness & KSE-100
Post by: onlybulls on September 29, 2018, 04:19:48 PM
.
Title: Re: Exchange rate weakness & KSE-100
Post by: rashid.Maria on September 29, 2018, 05:49:18 PM
.

Dollar touch 127 in open market. MP kab announce honi  hai
Title: Re: Exchange rate weakness & KSE-100
Post by: Moazzam on September 29, 2018, 07:50:00 PM
.

Dollar touch 127 in open market. MP kab announce honi  hai
http://www.sbp.org.pk/press/2018/PR-29-Sep-18.pdf
Title: Re: Exchange rate weakness & KSE-100
Post by: Farzooq on October 11, 2018, 09:51:04 AM
FOREX Market Preempting Entry in Another IMF Program?

Weakness in the Pak Rupee

As we write, the Pak Rupee has once again caved in to pressure against the US Dollar, depicting the largest intraday swing of 8.63% to ~135.00 in the interbank vis-à-vis last closing of 124.27. Albeit, we put off any conclusions of settlement in the early hours of FOREX trading so as to identify by day end whether or not the parity has been adjusted by the State Bank of Pakistan (SBP). Although the widening Current Account Deficit (at USD 2.7bn in 2MFY18; +10% YoY) together with depleting reserves (at USD 14.89bn at present vis-à-vis last years high of USD 22.24bn observed in Jan’17) have persistently mounted pressure on the PKR-USD parity, we cite yesterday’s announcement to approach International Monetary Fund (IMF) for a potential bail out package as a possible reason for depreciation of the Pak Rupee. To recall, last major movement in a single day was witnessed in Jul’18 whereby the SBP let slip the PKR against USD by 5.31% DoD to settle at 128.00, due to concerns over the deteriorating external account. However, it had reversed by 3.12% to ~124/USD soon after and had settled at the same level ever since.
Title: Re: Exchange rate weakness & KSE-100
Post by: Farzooq on May 19, 2019, 11:00:53 PM
Higher the inflation, higher would be the nominal currency depreciation to bring REER back to 100. In coming months, with high energy prices and new taxes - removal of tax exemptions, inflation may touch double digits. Market is expecting inflation to peak in September. Expect some currency depreciation after that - in November and December.

The market expects parity at 160-165 by December. 
Title: Re: Exchange rate weakness & KSE-100
Post by: Farzooq on May 19, 2019, 11:03:24 PM
Devaluation is positive for E&P, textiles and ipps
Title: Re: Exchange rate weakness & KSE-100
Post by: nma on May 20, 2019, 05:11:14 AM
Devaluation is positive for E&P, textiles and ipps

Yar Janaza tou nikal gaya hai IPPs ka. Ghanta faida hai investor ko
Title: Re: Exchange rate weakness & KSE-100
Post by: hizohaib3 on May 20, 2019, 07:40:44 AM
high devaluation of rupee and high interest rates are main reasons why investors not entering the stock market
Title: Re: Exchange rate weakness & KSE-100
Post by: AL-IMRAN on May 20, 2019, 11:13:17 AM
high devaluation of rupee and high interest rates are main reasons why investors not entering the stock market

Market ko choro ek benefit hai high interest rate ka Bank profit bohat accha milega fixed deposit or other savings par for example behbood saving, pension benefit account par.. mazay he mazay ....mazay he mazay...........ek lakh par 17% p.a tak profit mil raha hai to kia bura hai..
Title: Re: Exchange rate weakness & KSE-100
Post by: Farzooq on June 14, 2019, 01:07:31 PM
US #dollar continues to rise, reaches Rs. 157 in interbank market

Expectations
#Dollar 160 vs #PKR by 30 June. 180 by Dec. Interest Rates 16% by Dec. #PSX #KSE100
Title: Re: Exchange rate weakness & KSE-100
Post by: ajeebkhan on June 14, 2019, 03:53:43 PM
US #dollar continues to rise, reaches Rs. 157 in interbank market

Expectations
#Dollar 160 vs #PKR by 30 June. 180 by Dec. Interest Rates 16% by Dec. #PSX #KSE100
And it looks that our PSX our Kse100index would be trading @ 95000 index level ... Heheheh
Title: Re: Exchange rate weakness & KSE-100
Post by: kamranbutt_dada on June 14, 2019, 08:03:42 PM
US #dollar continues to rise, reaches Rs. 157 in interbank market

Expectations
#Dollar 160 vs #PKR by 30 June. 180 by Dec. Interest Rates 16% by Dec. #PSX #KSE100

Govt already withdrawn tax exemption on 5 exports sectors.
Which sector/company will benefit from this now?
Title: Re: Exchange rate weakness & KSE-100
Post by: mansoor ahmed on June 15, 2019, 08:16:59 PM
ADB to give 3.4 billion dollars for budgetary support. This will help our foreign reserves. Hafeez sheikh tweeted
Title: Re: Exchange rate weakness & KSE-100
Post by: Farzooq on June 26, 2019, 02:02:43 PM
US #dollar continues to rise, reaches Rs. 157 in interbank market

Expectations
#Dollar 160 vs #PKR by 30 June. 180 by Dec. Interest Rates 16% by Dec. #PSX #KSE100

162
Title: Re: Exchange rate weakness & KSE-100
Post by: DK on June 27, 2019, 12:05:23 PM
US #dollar continues to rise, reaches Rs. 157 in interbank market

Expectations
#Dollar 160 vs #PKR by 30 June. 180 by Dec. Interest Rates 16% by Dec. #PSX #KSE100

162

farzooq bhai inter bank rate for LC today is 165.75
Title: Re: Exchange rate weakness & KSE-100
Post by: ajeebkhan on October 25, 2019, 05:58:56 PM
Today US Dollar gains 0.76%  or 1.15rs in a single trading session in Int Market settled at 155.85
Title: Re: Exchange rate weakness & KSE-100
Post by: aatradekhi on October 25, 2019, 06:09:00 PM
Today US Dollar gains 0.76%  or 1.15rs in a single trading session in Int Market settled at 155.85

Today HBL Import rate is 156.10-15 and NBP 156.35
Title: Re: Exchange rate weakness & KSE-100
Post by: ajeebkhan on October 25, 2019, 06:10:32 PM
Today US Dollar gains 0.76%  or 1.15rs in a single trading session in Int Market settled at 155.85

Today HBL Import rate is 156.10-15 and NBP 156.35
I don't have history .. plz tell me how much it's increased or decreased today ??
Title: Re: Exchange rate weakness & KSE-100
Post by: aatradekhi on October 25, 2019, 06:24:25 PM
Today US Dollar gains 0.76%  or 1.15rs in a single trading session in Int Market settled at 155.85

Today HBL Import rate is 156.10-15 and NBP 156.35
I don't have history .. plz tell me how much it's increased or decreased today ??

both yesterday and today are same rate.