Rupee trades above 280/$ for 1st time since Jan'24
The last time the rupee traded above 280/$ was in January 2024. Over the past week, the currency continued its gradual decline, losing Rs0.30 (0.11%) in the interbank market.
According to the State Bank of Pakistan (SBP), the rupee ended at 279.97/$, compared to 279.67/$ in the previous week's closing.
The currency has recorded a 0.14% depreciation month-to-date, while the calendar year-to-date decline stands at 0.54%. Since the start of the fiscal year, the rupee has weakened by 0.62%, according to AHL data.
The historical trend highlights a sharp depreciation in late 2023, followed by relative stability in mid-2024, before resuming a gradual decline. The recent depreciation signals renewed pressure on the external front, influenced by rising imports and financial outflows.
Zafar Paracha, Secretary General of the Exchange Companies Association of Pakistan (ECAP), stated that while there is some pressure on the currency market, particularly due to rising import demand and debt repayments by the SBP, the situation remains stable. He noted that December typically sees profit-taking by foreign investors, as nearly 80% of banks have foreign shareholders who repatriate profits at year-end. Additionally, import pressure has increased, but there is no cause for concern. The exchange rate movement is minimal, with a less than 1% decrease, keeping the rupee stable at around 280/$.
Paracha highlighted that remittance inflows tend to improve during Ramazan, as overseas Pakistanis send financial support to their families and contribute towards charity, zakat, and donations. Exchange companies alone are expected to contribute $600 million in inflows. He further emphasised the need for incentives for exchange companies and overseas remittances, similar to the benefits provided to exporters.
According to the SBP, workers' remittances recorded an inflow of $3.1 billion in February 2025, reflecting a 38.6% year-on-year (y/y) and 3.8% month-on-month (m/m) increase. Cumulatively, remittances reached $24.0 billion during July-February FY25, marking a 32.5% rise from $18.1 billion in the same period last year. The largest sources of remittances were Saudi Arabia ($744.4 million), the United Arab Emirates ($652.2 million), the United Kingdom ($501.8 million), and the United States ($309.4 million).
Paracha projected that remittances would rise by 10% month-on-month during Ramazan, further strengthening Pakistan's foreign exchange reserves.
"Billionaire exporters receive billions of rupees in incentives, including rebates, low-cost loans, and other subsidies, yet their contribution remains stagnant. In contrast, overseas workers, who earn an average of $250 per month, have sent over $35 billion in remittancesa figure that could double if given the same importance and incentives as exporters," he said.
Meanwhile, gold prices in Pakistan remained unchanged on Monday, with per tola holding steady at Rs306,000.
According to the All-Pakistan Gems and Jewellers Sarafa Association (APGJSA), the 10-gram gold rate also remained stable at Rs262,345.
On Saturday, gold per tola had dropped by Rs1,000, settling at Rs306,000. The international gold price also saw no change, standing at $2,910 per ounce, including a $20 premium, as per APGJSA.
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Who can an Issuer of Virtual Asset Issuer means the legal person that originates or creates a Virtual Asset and retains primary control over its initial supply, reserve assets (if any) or on-chain governance, and that bears the ongoing obligations set out in this Ordinance toward holders. The law does not provide that an issuer has to be a Pakistani entity. It may be a foreign entity also. Minimum Paid Up Capital for: Both for Fiat Referenced Token issuer and Asset Referenced Token Issuer Rs 1 billion. However when (a) the total market capitalisation of the fiat referenced or Asset-Referenced token exceeds five billion Pakistani Rupees (PKR (5,000,000,000); or (b) the number of users based in Pakistan holding the fiat referenced or Asset-Referenced token exceeds five million (5,000,000). Additional capital requirements may be prescribed. 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High Quality of Liquid Assets mean cash, demand deposits with the State Bank of Pakistan, and other Level 1 assets recognised under the Basel III Liquidity-Coverage-Ratio framework as adopted by the State Bank of Pakistan, provided such assets are unencumbered, held in segregated custody, and can be sold for cash within one business day; Valuation Such Token will be tradeable digitally. The value shall be the value at which such token will be available. Kinds of Tokens The Ordinance has provided two kinds of Virtual Asset Tokens. These are: a. Asset-Referenced Token means a Virtual Asset (or a basket of assets) that purports to maintain a stable value by reference to another asset, other than a Virtual Asset, which may include one or more official currencies, and which may be backed by tangible or intangible assets. Provided that the use of any reference asset class shall be subject to such limitations or approvals as may be notified by the Authority; An asset-referenced token (ART) is a cryptographic token used for exchange. However, its value can be pegged to more than 1 fiat, physical asset, cryptocurrency, or a mixture of all three, as seen with PAX Gold, DIAM or the ill-fated Libra Coin from Facebook. b. Fiat-Referenced Token means a Virtual Asset that purports to maintain a stable value relative to a single Official Currency and is redeemable at par value by its Issuer. A fiat referenced token A fiat-referenced stablecoin is a type of cryptocurrency designed to maintain a stable value by being pegged to a fiat currency, like the US dollar or Euro. These stablecoins aim to combine the stability of traditional currencies with the technology and accessibility of digital assets. Mica's Classification of Virtual Assets The Markets in Crypto-Assets Regulation (MiCA) institutes uniform EU market rules for crypto-assets. The regulation classifies the virtual assets into: a. E-Money Tokens: These are like digital versions of traditional money (euros, dollars). They're stable and straightforward, referencing a single fiat currency. b. ARTs: They're similar to E-Money Tokens but can reference various assets. For instance, an ART could be linked to the price of oil, a basket of cryptocurrencies, or even multiple fiat currencies. This diversification makes them more complex. c. Other Crypto-Assets: This catch-all category includes crypto-assets that do not aim to stabilize their value by referencing other assets. For example, Bitcoin, which doesn't rely on anything else for its value, falls into this category. Pakistan has adopted only the first two kinds. The third classification is not permitted in Pakistan Reserve and redemption Fiat Reference Token An Issuer of a Fiat-Referenced Token shall: (a) maintain High Quality Liquid Assets (HQLA) or any other assets as Prescribed by the Authority, as reserve assets equal to at least hundred percent of the outstanding value of the fiat-referenced or Asset-Referenced token, ensuring at all times the ability to meet redemption requests; (b) hold such reserve assets in segregated accounts with custodians approved by the Authority in consultation with State Bank; (c) ensure timely redemption of each Fiat-Referenced Token at par value, without being: (i) unduly compromised by the disruption or failure of an intermediary or other relevant entity and infrastructure; or (ii) within such period as the Authority may prescribe. (d) publish quarterly audit reports of reserve composition and sufficiency, audited by an independent auditor approved by the Authority. (To be continued) Copyright Business Recorder, 2025
