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Express Tribune
21-06-2025
- Business
- Express Tribune
SBP injects Rs14tr to bridge gaps
Listen to article The State Bank of Pakistan (SBP) conducted one of the highest Open Market Operations (OMOs) on June 20, 2025, injecting liquidity worth a substantial Rs14.3 trillion into the banking system to meet temporary and structural liquidity requirements. According to official data, the SBP accepted Rs13.93 trillion through a conventional reverse repo (injection) at a rate of return of 11.03% per annum across 36 quotes. Additionally, a Shariah-compliant Mudarabah-based OMO injection of Rs375 billion was executed at a return of 11.11% per annum with three accepted quotes. Sana Tawfiq, Head of Research at Arif Habib Limited termed this "among the highest single-day OMOs by the central bank," attributing the surge to both temporary and permanent factors. She noted that currency in circulation typically rises ahead of Eid, creating a temporary liquidity gap. On the structural side, debt repayments and a time lag between repayments and fresh inflows are elevating liquidity needs, she explained. She added that the government's fiscal deficit financing — constrained by International Monetary Fund (IMF) conditions that bar direct borrowing from the SBP — has further amplified OMO reliance, with banks channelling funds into government securities instead. Market experts expect the liquidity injections to remain elevated in the near term until inflows match outflows and post-Eid cash demand normalises. Furthermore, the Pakistani rupee extended the declining trend against the US dollar in the interbank market on Friday, slipping by 0.02%. By the close of trading, the local currency settled at 283.70 against the greenback, down by six paisas from the previous day's closing rate of 283.64. Globally, the US dollar was on track for its largest weekly gain in over a month, supported by safe-haven demand as investors remained cautious over escalating tensions in the Middle East and their potential impact on the global economy. Meanwhile, gold prices in Pakistan fell on Friday in line with the international market, which remained steady but on track for a weekly loss as investors awaited clarity on the Israel-Iran conflict after US President Donald Trump delayed a decision on possible involvement. According to data released by the All-Pakistan Gems and Jewellers Sarafa Association (APGJSA), the price of 24-karat gold per tola dropped by Rs1,595 to settle at Rs357,000. Similarly, the rate for 10 grams of gold declined by Rs1,368 to Rs306,069. Internationally, gold prices were steady on Friday and poised for a weekly loss after President Trump delayed a decision on entering the Israel-Iran conflict, according to Reuters. Spot gold was little changed at $3,369.63 an ounce, as of 1557 GMT. Adnan Agar, Director of Interactive Commodities said gold prices remained range-bound on Friday, with the metal trading between $3,340 and $3,375 in the international market, as investors awaited clarity on geopolitical developments in the Middle East. He told The Express Tribune that the market has been on a downward trend for the past five trading sessions, with a key support level identified at $3,320.
Express Tribune
22-05-2025
- Business
- Express Tribune
Power generation hits 4-year high in April
Listen to article Pakistan's power generation in April 2025 surged to 10,513 gigawatt-hours (GWh), reflecting a robust 22% year-on-year (YoY) and 25% month-on-month (MoM) increase — the highest monthly generation recorded in the past 48 months, according to data published by the National Electric Power Regulatory Authority (NEPRA). "Power generation in April'25 surged by 22% YoY, highest in 48 months, to 10,513 GWh," wrote Arif Habib Limited (AHL). Despite this sharp rise, generation remained broadly aligned with the regulatory reference level, helping produce a positive Fuel Cost Adjustment (FCA) for the month, the first since June 2024. "Shift to expensive fuel mix resulted in the first positive FCA after June 2024," said Research Head of Optimus Capital, Maaz Azam. The uptick in generation is largely attributed to soaring electricity demand, spurred by rising temperatures and reduced reliance by industries on captive power generation. Analysts believe the shift was also influenced by lower grid tariffs, which made national grid electricity more attractive compared to captive sources. "The rise in generation is attributed to increased demand, driven by a reduction in tariffs," said Research Head of AHL, Sana Tawfiq. Cumulative power generation during the first 10 months of the fiscal year 2025 (10MFY25) reached 100,661 GWh, showing a marginal decline of 0.4% YoY from the same period last year. In terms of source-wise contribution, hydropower (hydel) led the mix with 2,306 GWh (22% share), up 11% YoY, followed by re-gasified liquefied natural gas (RLNG) at 2,157 GWh (21%) and nuclear at 1,882 GWh (18%). A notable highlight was the 59% YoY growth in local coal-based generation, which rose to 1,540 GWh, supported by increased utilisation and favourable fuel costs. Conversely, generation from imported coal and natural gas declined by 32% and 26% YoY, respectively, reflecting deliberate cost-cutting and fuel optimisation strategies. Wind and solar energy maintained a combined share of 9.2%, consistent with seasonal patterns, while residual fuel oil (RFO) re-entered the generation mix with 83 GWh at a steep cost of Rs28.77/kWh. From a policy perspective, a significant development in March 2025 was the imposition of a Rs791/mmbtu levy on gas-based captive power plants (CPPs), raising their effective gas tariff to Rs4,291/mmbtu. According to estimates by AKD Securities, this translates into a staggering generation cost of around Rs42/kWh for off-grid captive units operating at 35% thermal efficiency. This steep cost differential prompted many industrial users to switch to relatively cheaper grid electricity, which averaged around Rs28/kWh (excluding taxes and duties). While the fuel cost of power generation rose by 8% YoY to Rs9.92/kWh in April 2025, driven by a heavier reliance on expensive fuels like RLNG and RFO, the average cost of generation actually fell on a MoM and YoY basis. It dropped to Rs8.95/kWh, down 5% YoY and 8% MoM, compared to Rs9.75/kWh in April 2024reflecting improved fuel mix efficiency and lower reliance on imported fuels. According to Optimus Capital Management, the total generation of 10,513 GWh in April was slightly below the reference level of 10,550 GWh, a shortfall of just 0.4%. However, changes in the fuel mix were stark. Hydel power dropped by 28.6% versus its reference (3,228 GWh), while coal-fired generation soared by 48.6%, with imported coal usage jumping 115.1% and local coal rising 22.5%. Meanwhile, RLNG generation grew by 42.1%, and nuclear generation fell by 22.3%. The cost impact of this fuel mix shift was significant. RLNG's contribution to fuel cost jumped to Rs4.98/kWh, up from a reference of Rs3.31/kWh. Local and imported coal together contributed Rs3.30/kWh, while nuclear (Rs0.38/kWh) and hydel (zero marginal cost) remained low-cost contributors. The net result was a positive FCA of Rs1.27/kWh, calculated against a reference fuel cost of Rs7.68/kWh. This marked change in fuel mix, particularly the increased reliance on RLNG and coal, alongside stable generation levels, led to the country's first positive FCA adjustment in 10 months, a noteworthy development for both consumers and the broader energy sector.
Gulf Today
12-05-2025
- Business
- Gulf Today
Pakistan's stock, international bonds soar after ceasefire with India
"While optimistic, sustaining momentum requires ceasefire compliance, accelerated reforms, and managing global headwinds like oil prices," senior economist Sanie Khan told AFP. Pakistan's stocks closed up 9.4% and its international bonds also recorded strong gains on Monday after a ceasefire deal with neighbouring India agreed over the weekend fuelled a relief rally. Pakistan's main stocks benchmark — the KSE-100 share index — rose 9.6%, to its highest level since April 23, and closed at 9.4%, marking its highest ever gain in terms of points and percentage. The benchmark KSE-100 Index opened at 117,104.11 points, up 9,929.48 points, or 9.26 per cent, prompting an hour-long trading suspension because limits had been reached. "Today's sharp surge in the stock market stems from a powerful convergence of bullish triggers that have swiftly turned investor sentiment from fear to opportunity," Sana Tawfiq, head of research at Arif Habib Limited, Pakistan's largest securities brokerage, told AFP. The country's international bonds rallied sharply, adding as much as 5.7 cents in the dollar, Tradeweb data showed. The jump also comes on the back of the International Monetary Fund (IMF) on Friday approving a Pakistan loan-programme review, unlocking around $1 billion in much-needed funds and greenlighting a new $1.4 billion bailout despite India's objections. "We are very pleased today that the market has performed extremely well," Ahmed Chinoy, director of the Pakistan Stock Exchange Limited, told AFP, while celebrating by cutting a cake with brokers. "This positive shift is reinforced by the IMF's dual approvals, providing both critical funding and international validation of Pakistan's reform path," Tawfiq added. Saturday's ceasefire in the region, announced by US President Donald Trump, followed four days of fighting and diplomacy and pressure from Washington. "After four days of tense clashes that pushed India and Pakistan close to war, a ceasefire appears to be holding after being announced on Saturday," said Jim Reid at Deutsche Bank in a note to clients. The gains in stocks came after the exchange halted trading on Monday for an hour, according to an exchange notification. In a research note, Arif Habib Limited said that while a ceasefire and diplomatic progress have boosted optimism, unforeseen escalations remained a risk. The US president pledging support for resolving the Kashmir issue and encouraging enhanced trade relations between India and Pakistan, the IMF's nod on Pakistan, as well as the central bank's 100 basis points rate key rate cut last Monday which is "expected to boost equity valuations," should all encourage stability, the note said. In a series of posts on social media, Trump also pledged to increase trade with both nations. A policy rate cut by the country's central bank was also seen as a positive factor boosting equity flows. Agencies
Al Arabiya
12-05-2025
- Business
- Al Arabiya
Pakistan stocks surge after ceasefire with India
Pakistan stocks surged on Monday, with the benchmark index opening nine percent higher after a weekend ceasefire agreement with the country's arch rival India. United States President Donald Trump announced the truce after four days of missile, drone and artillery attacks by India and Pakistan which killed at least 60 people and reached deep into the territory of both countries. The benchmark KSE-100 Index opened at 117,104.11 points, up 9,929.48 points, or by 9.26 percent. 'Today's sharp surge in the stock market stems from a powerful convergence of bullish triggers that have swiftly turned investor sentiment from fear to opportunity,' Sana Tawfiq, head of research at Arif Habib Limited, Pakistan's largest securities brokerage, told AFP. The jump also came after the International Monetary Fund (IMF) on Friday approved a loan program review for Pakistan, unlocking around $1 billion in much-needed funds and greenlighting a new $1.4 billion bailout despite India's objections. 'This positive shift is reinforced by the IMF's dual approvals, providing both critical funding and international validation of Pakistan's reform path,' Tawfiq added. Trump, in a series of posts on social media announcing the ceasefire mediated by the US, pledged to increase trade 'substantially' with both nations. 'While optimistic, sustaining momentum requires ceasefire compliance, accelerated reforms, and managing global headwinds like oil prices,' senior economist Sanie Khan told AFP. A policy rate cut by the country's central bank was also seen as a positive factor boosting equity flows.
Express Tribune
10-05-2025
- Business
- Express Tribune
Remittances boom fades in April
Listen to article Buoyant remittances, relied upon by the government to support its external financing needs, have witnessed a sharp 22% decline on a month-on-month basis in April 2025. This drop, following record inflows in March, has raised concerns over a potential current account deficit, which analysts estimate could fall between $350 and $400 million for the month. Pakistan received workers' remittances worth $ 3.2 billion in April 2025, according to data released by the State Bank of Pakistan (SBP). This marks a 13.1% increase on a year-on-year basis, reflecting a continued trend of strong inflows from overseas Pakistanis. The cumulative inflow during Jul-Apr FY25 has now reached $31.2 billion, representing a significant 30.9% rise compared to $23.9 billion in the same period last fiscal year. Key contributors to April's inflows were Saudi Arabia ($725.4 million), the United Arab Emirates ($657.6 million), the United Kingdom ($535.3 million), and the United States ($302.4 million). "Although April's inflows were solid, they showed a month-on-month (MoM)decline when compared to the exceptionally high figure of $4.1 billion in March 2025," Commenting on the latest figures, Sana Tawfiq, Head of Research at Arif Habib Limited (AHL), told The Express Tribune. She attributed this dip to the end of seasonal factors, particularly the surge in remittances seen during Ramzan and Eid, which traditionally lead to a temporary spike in transfers. "Now that the Eid-related effect has subsided, a MoM correction was expected," she stated. Tawfiq emphasised that despite the decline from March, the average run-rate of remittances remains strong, which is a positive indicator for the economy. Tawfiq also highlighted potential challenges for the external account, forecasting a current account deficit for April 2025, estimated in the range of $350400 million. She pointed to the $5.5 billion import bill, as reflected in preliminary dat of Pakistan Bureau of Statistics (PBS), as a primary factor contributing to this deficit. While the SBP's final balance-of-payments data is still pending, the trade figures suggest a temporary widening in the current account gap. However, Tawfiq maintained an optimistic outlook for the full fiscal year, projecting a current account surplus of around $1.3 billion for FY25, assuming stability in remittance inflows and controlled imports. Despite the short-term dip in April and a likely one-off deficit, the broader trend in workers' remittances remains favourable. These inflows continue to serve as a crucial buffer for Pakistan's external account, supporting macroeconomic stability amid global and domestic challenges. Ali Najib, Head of Sales Insight Securities, said the increase in workers' remittances is primarily attributable to exchange rate stability, regulatory measures against informal transfer channels, growth in overseas employment, expansion of digital banking infrastructure, and supportive government policies. These factors collectively enhanced formal remittance inflows and bolstered external sector stability. The current remittance growth, driven by increased labour migration to GCC countries, especially Saudi Arabia and the UAE, where regulatory reforms appear sustainable in the near term. However, evolving visa policies in those countries and potential economic fluctuations (especially the consistent declining trend in international oil prices) in the Gulf region pose medium-term risks to this trajectory. "Government should focus on diversifying remittance sources before it gets too late," said Najib. Waqas Ghani Kukaswadia, Research Head of JS Global, said the current trajectory appears promising, especially with sustained labour demand in Saudi Arabia in the coming years. However, sustainability from the UAE remains uncertain due to a marked slowdown in labour exports to the country. If Pakistan is able to negotiate more flexible immigration policies with the UAE, it could unlock further growth in remittances. Overall, the trend is positive, but continued momentum will depend on maintaining currency stability and expanding labour market access in key Gulf economies. The data on workers' remittances for April 2025 highlights several challenges that Pakistan faces in maintaining stable inflows from its diaspora. One key issue is the declining or volatile remittances from certain regions, such as the GCC countries (excluding Saudi Arabia and the UAE), where nations like Bahrain and Kuwait recorded negative growth in FY24. Similarly, remittances from Japan and Canada saw significant drops in FY24, with Japan experiencing a sharp 33.3% decline. While some countries, like South Africa, rebounded strongly in FY25, their earlier negative growth underscores instability in these markets. Another concern is the monthly volatility in remittance flows. For instance, remittances fell by 21.5% from March to April 2025, and the year-on-year growth for April (13.1%) was notably lower than March's 37.2%. Such fluctuations make it difficult to predict and plan for consistent foreign exchange earnings. Additionally, Pakistan's heavy reliance on a few key countriesSaudi Arabia, the UAE, the UK, and the USfor over half of its remittances poses a risk, as economic downturns or policy changes in these nations could disproportionately impact inflows. The data also reveals underperformance in some EU countries, such as the Netherlands and Denmark, where remittances contracted in FY24 despite overall growth in the region.
