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Express Tribune
6 days ago
- Business
- Express Tribune
FX dips to $19.96b despite SBP's uptick
Listen to article Pakistan's total liquid foreign exchange reserves stood at $19.96 billion as of July 11, 2025, marking a marginal decline of $71.6 million over the previous week, according to data released by the State Bank of Pakistan (SBP) on Thursday. The reserves held by the SBP rose by $23 million, reaching $14.53 billion, compared to $14.50 billion recorded a week earlier. This reflects the second consecutive weekly increase in central bank reserves. However, commercial banks saw a notable dip in their net foreign holdings, which fell by $95 million to $5.43 billion. The current foreign reserves provide Pakistan with over three months of import cover. Out of the SBP's total foreign exchange holdings of $14.5 billion, approximately $9.4 billion comprises deposits from friendly countries. In June 2025, China rolled over $3.4 billion in commercial loans, with $2.1 billion deposited directly with the SBP. Saudi Arabia and the UAE have provided up to $2 billion and $1 billion, respectively, while Qatar has contributed around $3 billion through deposits and direct investments. Moreover, the central bank conducted two separate Open Market Operations (OMOs) on Thursday to inject a liquidity of Rs902.5 billion into the banking system - one under the Shariah-compliant Mudarabah-based framework and the other through a conventional reverse repo arrangement. Both operations were conducted with an eight-day tenor. In the Shariah-compliant OMO, the central bank accepted all three submitted quotes within a narrow rate band of 11.13% to 11.15% per annum. The total injection was Rs37.39 billion (realised value) against a face value of Rs37 billion, with the rate of return fixed at 11.13%. Simultaneously, the SBP carried out a conventional reverse repo OMO, receiving 13 quotes, of which 11 were accepted. The accepted bids amounted to a face value of Rs883.2 billion, with a realised value of Rs865.13 billion. The rate of return was 11.08% per annum. In the latest Pakistan Investment Bonds' (PIBs) auction held on July 16, the government raised Rs311.82 billion, surpassing its target of Rs300 billion, mainly through five-year bonds. Cut-off yields dropped significantly across all tenors by 19 to 54 basis points compared to June, which reflected strong market confidence and expectations of policy rate cut amid easing inflation and improving macroeconomic indicators. Notably, the two-year and five-year bonds saw the steepest decline in yields, while the 15-year bond got no bids. "The sharp decline in yields signals growing market anticipation of a policy rate cut in the upcoming monetary policy, likely driven by easing inflation and improved macro indicators," noted Ali Najib, Deputy Head of Trading at Arif Habib Limited. The Pakistani rupee remained stable against the US dollar on Thursday, closing at 284.97, down by just one paisa from 284.96 a day earlier. Meanwhile, gold prices in Pakistan continued to slide, mirroring a downturn in the international market, where bullion extended losses following robust US economic data. The data bolstered expectations that the Federal Reserve would remain cautious in resuming monetary easing this year, putting pressure on safe-haven assets like gold. According to the All Pakistan Sarafa Gems and Jewellers Association, the price of gold dropped by Rs900 per tola, settling at Rs355,100. Interactive Commodities Director Adnan Agar noted, "After dipping slightly, the market has rebounded somewhat. The $3,300 level is acting as a strong support," he said. "If prices fall below that, we could see a bearish trend. However, if this level holds, resistance lies ahead at $3,350, then $3,380 and eventually at $3,400."
Arab News
14-07-2025
- Business
- Arab News
Pakistan Stock Exchange crosses 135,000 points as investors continue favoring equities
KARACHI: The Pakistan Stock Exchange (PSX) breached the 135,000 points barrier on Monday to reach an all-time high during intraday trading, with financial analysts attributing the surge to investors' continued preference of equities over fixed income assets. The KSE-100 Index reached 135,723.53 points during intraday trading, gaining 1423.77 points or by 1.06 percent from its last close of 134,299.76 points on Friday. Karachi-based brokerage company Topline Securities had attributed the surge to consistent inflows from mutual funds last week, saying investors were continuing to shift from fixed income assets to equity funds. 'The stocks are hitting new highs as investors continue to switch from fixed income asset class to equities,' Shahid Ali Habib, chief executive officer at Arif Habib Limited, told Arab News. Habib said investors were turning to equities as fixed income yields were low, adding that investors are 'continuously getting confidence that it will continue to remain low for next year too.' 'More liquidity is coming and the investors are trying to identify new alpha stocks,' the analysts noted. State broadcaster Radio Pakistan credited the government's economic policies for the bullish trend at the stock market. 'The continued upward trend in the stock exchange reflects the increasing confidence of the trade and business community on economic policies introduced by the government,' Radio Pakistan reported. In a statement, Prime Minister Shehbaz Sharif expressed happiness over the surge in the stock market. 'Providing a business-friendly environment in the country is our top priority,' the Pakistani premier said. Sharif said Pakistan had now embarked on the path to economic growth, saying the government is working tirelessly for national development and the public's welfare.
Express Tribune
10-07-2025
- Business
- Express Tribune
Remittances hit record $38.3b
Listen to article Pakistan's worker remittances dropped 8% month-on-month (MoM) to $3.41 billion in June 2025, marking the end of a robust fiscal year. Despite the monthly dip, remittances for FY25 surged 27% year-on-year (YoY), reaching an all-time high of $38.3 billion. It comes in the wake of political and economic turmoil, which has forced a significant number of people to pursue migration. During June 2025, remittances amounted to $3.4 billion, up 8% from $3.2 billion in June 2024. However, inflows were down 8% MoM compared to $3.7 billion in May 2025, reflecting a typical post-Eid moderation. The sharp rise reflects multiple contributing factors, noted Arif Habib Limited Deputy Head of Trading Ali Najib. "Firstly, improved global economic conditions in key host countries, particularly in the Gulf region, supported higher income levels for overseas Pakistanis," he said. Secondly, there was formalisation of remittance channels, aided by the State Bank of Pakistan's (SBP) incentives under the Pakistan Remittance Initiative (PRI), and reduced reliance on informal means such as Hundi/Hawala, he added. Moreover, the relative stability of the rupee and tighter regulation of foreign exchange markets made formal transfers more attractive. The increase also signals rising confidence in Pakistan's banking system and a shift towards documented financial flows. The surge has positively impacted the country's current account position, supported foreign exchange reserves and provided crucial support to households dependent on remittances, thereby playing a significant role in stabilising macroeconomic fundamentals. "For FY26, $39.3 billion (around 3% YoY growth) is anticipated," said Najib. The annual surge was driven by higher inflows from traditional corridors such as Saudi Arabia ($9.3 billion, up 26%), the UAE ($7.8 billion, up 41%) and the UK ($5.9 billion, up 31%), as well as significant growth from EU countries ($4.5 billion, up 29%). Despite a 13% YoY decline in remittances from the United States, strong growth from the Gulf and Europe more than offset the shortfall. The robust rise in remittances played a key role in strengthening Pakistan's external account during FY25, supported by policy efforts to encourage the use of formal channels and digital banking platforms such as Roshan Digital Accounts. Pakistan is now one of the top five countries receiving the most remittances. Bangladesh also saw record inflows of $30 billion, up 26%, said Topline Securities CEO Mohammed Sohail. "They are a big source of support for both economies, helping bridge external gaps and boosting household incomes." However, the latest data for June 2025 reveals several emerging challenges. One of the most notable concerns is the MoM decline of 7.6% as remittances dropped to $3.406 billion in June from $3.686 billion in May. This drop, occurring right after Eidul Azha, points to a pattern of volatility that continues to affect the stability of inflows. Although fiscal year 2025 ended with a record $38.3 billion, monthly dips signal that Pakistan's remittances remain highly seasonal and potentially vulnerable to external shocks. Country-wise data further highlights key risks. Remittances from the US declined 10.5% MoM and 12.7% YoY, indicating a significant downturn in inflows from a major contributor. Similarly, the United Kingdom and the UAE reported monthly declines of 8.6% and 4.9%, respectively. This is concerning given that these three countries, along with Saudi Arabia, account for nearly 70% of total remittances. Such concentration poses a serious risk – any geopolitical, economic or regulatory changes in these countries could disproportionately impact Pakistan's external financing position. Additionally, remittances from the Gulf Cooperation Council (GCC) countries, excluding Saudi Arabia and the UAE, saw a steep 16.1% MoM decline. While these countries posted overall growth for FY25, their dependence on oil revenues and increasingly localised labour policies could create future uncertainties for Pakistani workers. The decline in flows from developed countries like Japan (-30.4% YoY), Canada (-8.6% YoY) and Norway (-4.3% YoY) also points to stagnation in these corridors, possibly due to integration challenges, inflationary pressures or reduced remitter incomes. Moreover, inflows from "other countries", which include less traditional destinations, fell 9% MoM in June, suggesting under-diversified diaspora engagement. Another structural issue is the country's reliance on seasonal inflows, particularly during Ramazan and Eid months. For example, March to May 2025 saw a surge, peaking at $4.1 billion, but the subsequent drop in June reflects over-dependence on religious occasions to drive remittances. Experts suggest that to ensure stable inflows, Pakistan must diversify remittance sources, boost skilled labour exports and strengthen incentives for formal channels.
Express Tribune
07-07-2025
- Business
- Express Tribune
PSX sustains rally as KSE-100 index crosses 133,000
The Pakistan Stock Exchange (PSX) opened on a bullish note on Monday, with the benchmark KSE-100 Index gaining 1,187.99 points, or 0.9%, current index of 133,137.05 during intra-day trading. The index recorded a high of 133,156.63 and a low of 132,467.12. Trading volume stood at over 41 million shares, with the total traded value reaching Rs 3.39 billion. This builds on last week's strong opening to the new fiscal year, when the index had hit a then-record high of 131,949.06 points. Analysts attributed the positive momentum to investor optimism surrounding potential policy clarity and improving macroeconomic indicators. Earlier in the week, the Pakistan Stock Exchange (PSX) opened the new fiscal year on a bullish note, with the benchmark KSE-100 Index surging to an all-time high of 131,949.06 points during the week ended July 4, 2025. Read: PSX kicks off FY26 with historic week The index gained 7,570 points, or 6.1% week-on-week, driven by improving macroeconomic indicators, foreign inflows, and strong investor sentiment. The rally extended momentum from the previous fiscal year (FY25), which closed with the PSX ranked as the best-performing regional bourse, delivering a 60% annual return. Easing inflation, lower electricity tariffs, and renewed interest from both local and foreign investors supported the continued upward trajectory. According to Arif Habib Limited's (AHL) weekly report, the KSE-100 Index surged from 125,627.31 to 131,949.06 during the week, posting a 6.1% gain. The rally was broad-based, supported by improved macroeconomic indicators. Inflation for June 2025 eased to 3.2% from 3.5% in May, as reported by the Pakistan Bureau of Statistics (PBS). JS Global's Syed Danyal Hussain noted that the KSE-100 index's strong FY25 close and continued FY26 momentum reflect improving sentiment. The index's 6% week-on-week increase was complemented by a 31% rise in average daily turnover (ADTO). June 2025's CPI came in at 3.2% year-on-year, bringing the FY25 average to 4.5%, a drop from 23.4% in FY24.
Express Tribune
05-07-2025
- Business
- Express Tribune
SPI rises 0.73% on food, fuel surge
Listen to article The Sensitive Price Index (SPI) for the week ending July 3, 2025, posted a week-on-week (WoW) increase of 0.73%, driven largely by a surge in food and fuel prices. However, on a year-on-year (YoY) basis, SPI recorded a decline of 2.06%, reflecting a mixed trend of inflation across essential consumer goods. According to the Pakistan Bureau of Statistics (PBS) and Arif Habib Limited (AHL), significant weekly increases were observed in the prices of chicken (13.05%), onions (11.62%), tomatoes (11.09%), garlic (5.40%), diesel (3.94%), potatoes (3.58%), petrol (3.22%), and sugar (1.27%). Smaller hikes were also noted in cooked daal, gur, curd, and powdered milk. Conversely, a decrease was reported in LPG prices (-8.53%), bananas (-3.36%), eggs (-0.59%), mustard oil (-0.37%), pulse moong (-0.30%), and pulse gram (-0.29%). Out of 51 essential items tracked during the week, 18 (35.29%) recorded price increases, 6 (11.77%) declined, while the prices of 27 (52.94%) remained stable. On a yearly basis, inflation has visibly cooled, with several essential commodities seeing steep price drops. Tomatoes led the decline with a YoY fall of 61.42%, followed by onions (-53.71%), electricity charges for the lowest income quintile (-37.62%), garlic (-24.29%), wheat flour (-23.62%), pulse mash (-20.27%), and Lipton tea (-17.93%). Other notable declines included potatoes, pulse masoor, IRRI-6/9 rice, chilli powder, and bread. However, YoY prices surged for a few key food and non-food items. Ladies' sandals recorded a sharp increase of 55.62%, sugar rose by 27.78%, pulse moong by 20.59%, powdered milk by 16.01%, and beef by 15.45%. Prices of vegetable ghee, gur, firewood, lawn fabric, cooked daal, and cooked beef also registered double-digit annual increases. The group-wise SPI breakdown showed that all income groups experienced weekly inflation, with the second quintile (Q2) seeing the highest WoW increase of 0.80%, and the highest income group (Q5) recording a 0.70% increase. YoY inflation was negative across all groups, with the most substantial decline of 3.93% seen in Q2. The combined index stood at 312.06 points, down from 318.61 points a year earlier. A look at the historical trend of SPI YoY change reveals that since April 2025, prices have generally remained in negative territory. The sharpest YoY deflation was seen in April at -3.66%, followed by a brief recovery in May. The latest YoY figure of -2.06% reinforces the disinflationary pattern, though the recent weekly spike signals continued volatility in perishable food and fuel categories. Furthermore, the National Consumer Price Index (NCPI) is expected to edge lower to 3.2% YoY in June 2025, supported by a favourable base effect, according to Optimus Capital Management. On a monthly basis, NCPI is projected to inch up by 0.2% MoM, driven primarily by a 0.6% rise in the housing index and a 0.7% increase in the clothing index. In contrast, the food index is anticipated to decline by 0.2% MoM, helping to moderate the overall inflation reading. A correction in gold prices and the supportive base are also likely to bring core inflation down to 7.3% YoY, marking a 0.6 percentage point decline from the previous month. Electricity prices are expected to rise by 5.7% MoM in June after falling for seven consecutive months. This increase is attributed to a Rs1.22/kWh hike in the Fuel Cost Adjustment (FCA) and its application to previously protected consumer categories. Meanwhile, the food index is expected to remain largely flat on a monthly basis, as sharp weekly increases in perishable items like tomatoes (+59%) and potatoes (+26%) are likely to be offset by a 32% week-on-week drop in chicken prices, according to SPI data. The recent revision in gas tariffs, including higher fixed charges for domestic users, is estimated to result in a 23% MoM jump in the gas price index, based on the previous methodology used by the PBS, which had earlier drawn criticism. Despite the surge, the impact on YoY NCPI is estimated at 0.71%.
