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Business Standard
23-07-2025
- Business
- Business Standard
RBI net buys $1.76 bn in May; forward short dollar position at $65.21 bn
The Reserve Bank of India (RBI) net bought $1.76 billion in May, after a net sale of $1.6 billion in April, according to the central bank's monthly bulletin. The RBI bought $9.12 billion and sold $7.36 billion of foreign currency in May. The rupee depreciated by 1.3 per cent during the month. Before May, the RBI was a net buyer of the greenback only in March, while it remained a net seller in January, February, and April. The outstanding net short dollar position in the rupee forward market fell further to $65.21 billion by the end of May, compared to $72.57 billion at the end of April. 'Around $7 billion short positions matured in May which were not rolled over,' said a dealer at a state-owned bank. 'In spot, the dollar index had declined and the RBI had accumulated dollars,' he added. The dollar index fell 0.14 per cent to 99.33 in May. It measures the strength of the US dollar against a basket of six major currencies. Of the $65 billion net short dollar position, $4.8 billion was in one-month contracts, $10.2 billion in one- to three-month tenures, $30 billion is set to mature between three months and one year, and the remaining $20 billion was in contracts exceeding one year. As of June 2025, the Real Effective Exchange Rate (REER) of the Indian rupee fell to 100.36, down from 101.12 in May. In May, the REER had increased after five consecutive months of moderation since December 2024. Prior to the recent decline, the REER had climbed steadily from 103.66 in January 2024 to a peak of 108.14 in November. The REER adjusts the Nominal Effective Exchange Rate (NEER) to account for inflation differentials between India and its major trading partners. A REER value above 100 indicates an appreciation of the rupee relative to the base year, potentially making Indian exports less competitive in global markets.
Business Recorder
19-07-2025
- Business
- Business Recorder
C/A posts surplus of over $2bn after 14 years
KARACHI: Pakistan's current account balance recorded a surplus of over 2 billion dollars in the last fiscal year (FY25) for the first time in 14 years, driven by a substantial increase in workers' remittances. The State Bank of Pakistan (SBP) on Friday reported that Pakistan has achieved a current account surplus of $2.1 billion in FY25 as against a deficit of $2.1 billion in the previous year (FY24). Khurram Schehzad, Advisor to the finance minister, has said that annual current account surplus has been recorded after a gap of 14 years, and the largest surplus in 22 years. He termed it a key development on the external front of Pakistan's economy, adding that the overall economic performance is encouraging and the country is on the right track due to appropriate policy measures. Monthly basis, the current account balance for the last month (June) of FY25 also posted a surplus of $328 million, compared to deficit of $500 million in June 2024. In addition, current statistics of June 2025 are also better than May 2025, in which the country posted $84 million deficit. Economists attribute this improvement to robust policy measures and consistent efforts by the federal government and the SBP to strengthen the external account and channel remittances through formal avenues. They said that all time high inflows of remittances is the major factor was behind the current account surplus in the last fiscal year. 'The remarkable shift was primarily fuelled by a sharp rise in workers' remittances, which provided crucial support to the external account,' they added. In a historic economic milestone, with a significant 27 percent growth, Pakistan recorded its highest-ever home remittance inflows, exceeding $38 billion during the last fiscal year FY25. According to SBP, Pakistan's trade deficit widened by $4.6 billion to $26.78 billion in FY25, compared to $22.18 billion in FY24. The increase was primarily driven by a higher import bill amid a pickup in economic activity. During the period under review, import bill increased by 11 percent to $59 billion from $53 billion. Exports also posted 4 percent or $1.295 billion growth to reach $32.295 billion in FY25 from $31 billion in FY24. Khurram Schehzad said that Real Effective Exchange Rate (REER) index has also dropped further to 96.6, rendering PKR more competitive against US$, which should support country's exports and keep external account in check. In addition, Pakistan Stock Market continues to be in the top Global rankings, currently 4th best globally Jul-25 to date, he said and added that on Friday Pakistan Equities Market (KSE-100) also crossed 140,000 points during the intraday trading, making a historic mark in its history, with market value crossing Rs 16.8 trillion (close to $60bn). Copyright Business Recorder, 2025
Business Recorder
19-07-2025
- Business
- Business Recorder
June C/A closes with $328m surplus: advisor
ISLAMABAD: Khurram Shahzad, adviser to the finance minister said that country's Current Account (CA) for June 2025 closes in $328 million surplus, taking full-year surplus to over $2.1 billion —annual surplus recorded after 14 years, and the largest surplus in 22 years. He further said that Real Effective Exchange Rate (REER) index has dropped further to 96.6, rendering PKR more competitive against US$, which should support country's exports and keep external account in check. Pakistan Equities Market (KSE-100) crossed 140,000 points, making a historic mark in its history, with market value crossing Rs16.8 trillion (close to $60 billion), he added. Separately, former caretaker minister Gohar Ejaz said the country is on track for positive economic development and growth, and any attempt to manipulate the exchange rate by any segment must be strongly resisted, as it would risk undoing three years of hard-earned economic stabilisation efforts. 'In June, the Real Effective Exchange Rate (REER) stood at 96.61, indicating that the Pakistani rupee is currently undervalued. It is essential to maintain a market-based exchange rate to preserve macroeconomic progress. The country is on track for positive economic development and growth, and any attempt to manipulate the exchange rate by any segment must be strongly resisted, as it would risk undoing three years of hard-earned economic stabilization efforts', Ejaz stated. He said that the State Bank of Pakistan (SBP) must continue to maintain positive real interest rates in accordance with the International Monetary Fund (IMF) agreement and basic economic principles. However, the current policy rate is 11 percent, while full-year inflation for 2025 stands at 4.6 percent. Maintaining a policy rate that is 6.4 percentage points above inflation lacks sound economic justification, he added. Copyright Business Recorder, 2025
Time of India
18-06-2025
- Business
- Time of India
US dollar may stay strong vs EM currencies, but rupee's worst could be over
As of end-November 2024, the 40-currency trade-weighted Real Effective Exchange Rate (REER) stood at 108.13—the highest on record—indicating that the Rupee was significantly overvalued. By end-April, the REER had corrected to 100.80, suggesting the overvaluation had already been addressed. That's the latest available data, as per the RBI bulletin. However, since then, the Rupee has underperformed its Asian peers. by Taboola by Taboola Sponsored Links Sponsored Links Promoted Links Promoted Links You May Like Play War Thunder now for free War Thunder Play Now Undo It has been the worst performer—weakening 1.3% against the Dollar—while the offshore Yuan has appreciated 1.1% during the same period. Play Video Pause Skip Backward Skip Forward Unmute Current Time 0:00 / Duration 0:00 Loaded : 0% 0:00 Stream Type LIVE Seek to live, currently behind live LIVE Remaining Time - 0:00 1x Playback Rate Chapters Chapters Descriptions descriptions off , selected Captions captions settings , opens captions settings dialog captions off , selected Audio Track default , selected Picture-in-Picture Fullscreen This is a modal window. Beginning of dialog window. Escape will cancel and close the window. Text Color White Black Red Green Blue Yellow Magenta Cyan Opacity Opaque Semi-Transparent Text Background Color Black White Red Green Blue Yellow Magenta Cyan Opacity Opaque Semi-Transparent Transparent Caption Area Background Color Black White Red Green Blue Yellow Magenta Cyan Opacity Transparent Semi-Transparent Opaque Font Size 50% 75% 100% 125% 150% 175% 200% 300% 400% Text Edge Style None Raised Depressed Uniform Drop shadow Font Family Proportional Sans-Serif Monospace Sans-Serif Proportional Serif Monospace Serif Casual Script Small Caps Reset restore all settings to the default values Done Close Modal Dialog End of dialog window. Other Asian currencies have gained between 0.4% and 7%. Based on this trend, the current REER could be close to 98.5, the lowest since February 2019, implying the Rupee is now deeply undervalued. This correction appears to be deliberate. The RBI has tactfully used the period of Dollar weakness, allowing the Rupee to weaken subtly while other currencies appreciated against the Dollar. Live Events Volatility, though higher than under the previous regime, has remained under control. While the perception might be that the Rupee has been stable, it has actually weakened about 10% against a basket of peer currencies over the past seven months. The RBI has also significantly squared off its short forward book, which had swelled to $90 billion. The correction in the Rupee's overvaluation can be viewed as a third pillar of monetary easing. While repo rate and CRR cuts have been widely discussed, this form of loosening often goes unnoticed. Such a correction could support India's emerging manufacturing momentum. On the flip side, Cross/INR rates have surged to all-time highs—EURINR is approaching 100 and GBPINR has crossed 116. We have been advising clients to avoid raising ECBs in EUR, JPY, and CHF. These are alternative reserve currencies and tend to outperform during trade tensions or periods driven by U.S. tax cuts. Forward points have collapsed. The 5-year forward yield is at 2.7%—an attractive level for those looking to hedge long-term USD payables. We believe the Dollar may continue weakening against major currencies, although it could remain firm against Asian and EM currencies. That said, we expect the Rupee's underperformance to end soon. With the overvaluation largely corrected, the Rupee is likely to align with its peer group. We expect it to track the Yuan more closely going forward. That said, recent geopolitical tensions in the Middle East and the spike in crude oil prices pose near-term risks for the Rupee. However, we believe the RBI will act to prevent any one-sided, idiosyncratic moves. Over the next 7–8 weeks, we expect the Rupee to trade in the 85–87 range, with a slight weakening bias. (The author is Founder and CEO IFA Global) ( Disclaimer : Recommendations, suggestions, views, and opinions given by experts are their own. These do not represent the views of the Economic Times)
Business Recorder
17-06-2025
- Business
- Business Recorder
Pakistan's REER index clocks in at 97.81 in May 2025
Pakistan's Real Effective Exchange Rate (REER), a measure of the value of a currency against a weighted average of several foreign currencies, dropped to 97.81 in May 2025, down from 99.31 (revised) in April 2025, data released by the State Bank of Pakistan (SBP) on Tuesday showed. A REER above 100 means the country's exports are uncompetitive, while imports are cheaper. The situation reverses when REER is below 100 on the index. As per SBP's latest data, the REER depreciated 1.51% month-on-month (MoM) in May 2025. When compared with May 2024, the REER value decreased by 3%, when it stood at 100.69. The SBP says a REER index of 100 should not be misinterpreted as denoting the equilibrium value of the currency. 'Movement of the REER away from 100 simply reflects changes relative to its average value in 2010 and is unrelated to its equilibrium value,' the central bank said in an explanatory note on the topic. Meanwhile, the Nominal Effective Exchange Rate Index (NEER) decreased by 1.19% MoM in May 2025 to a provisional value of 37.66 from 38.12 (revised) in April 2025. On a yearly basis, the NEER index decreased 3.92% from the value of 39.20 in May 2024. What is REER? As per the central bank, REER is an index of the price of a basket of goods in one country relative to the price of the same basket in that country's major trading partners. 'The prices of these baskets expressed in the same currency using the nominal exchange rate with each trading partner. The price of each trading partner's basket is weighted by its share in imports, exports, or total foreign trade,' the SBP website says.
