Latest news with #StateBankofPakistan
Express Tribune
12 hours ago
- Business
- Express Tribune
SBP injects Rs12.38 trillion
Listen to article The State Bank of Pakistan (SBP) injected Rs12.38 trillion into the financial system through two separate Open Market Operations (OMOs) on June 27, 2025, to manage the liquidity vacuum caused by Eid-related cash demand and fiscal needs of the government constrained by International Monetary Fund (IMF) conditions. The larger of the two was a conventional reverse repo OMO, in which SBP accepted Rs12.20 trillion out of Rs12.42 trillion offered by banks at a rate of 11.07% for a seven-day tenor. A total of 34 bids were accepted out of 36 received, with rates ranging between 11.20% and 11.04%. Additionally, a Shariah-compliant Mudarabah-based OMO saw the SBP accept Rs178 billion out of Rs326 billion offered at a slightly higher rate of 11.13% for the same tenor. Only two bids were received and accepted, showing limited participation from Islamic financial institutions. Analysts attributed the rise in OMO stock to higher currency in circulation during Eid (a temporary effect) and a lag between debt repayments and incoming inflows. They expect OMO levels to ease as inflows materialise in the coming weeks. In the currency market, the Pakistani rupee slightly weakened against the US dollar on Friday, falling by 0.02% in the interbank market. By day's end, the rupee closed at 283.72, down five paisas from Thursday's close of 283.67. Meanwhile, gold prices in Pakistan also saw a steep decline, mirroring a global drop of nearly 2% after confirmation of a US-China trade agreement boosted investor risk appetite and reduced demand for safe-haven assets. According to the All-Pakistan Gems and Jewellers Sarafa Association, the per tola gold price dropped by Rs5,000 to Rs351,000, while the 10-gram price fell Rs4,287 to Rs300,925. This came after gold gained Rs1,335 per tola the previous day, reaching Rs356,000. Adnan Agar, Director at Interactive Commodities, said gold hit a new intra-day low on Friday. "Gold touched a low of $3,255 and is now trading around $3,276 after opening at $3,320," he said, adding that, "The trend remains bearish, with potential downside targets near $3,213 before any short-term rebound." He added that confirmation of a US-China trade deal has dampened gold's momentum, and if similar agreements emerge with other major economies like the European Union, gold could revisit levels between $3,000 and $2,800 in the medium term. "Sentiment is currently tilted towards the downside, and the market may continue to face pressure into next week," Agar said.
Express Tribune
2 days ago
- Business
- Express Tribune
Govt plans new housing scheme
Listen to article With Pakistan's mortgage-to-GDP ratio abysmally low — below 1% — owing to the absence of a proper mortgage system, the federal government intends to launch a new subsidised housing finance scheme in the upcoming fiscal year. The initiative aims to spur demand in the real estate and construction sectors while making homeownership more accessible to middle- and lower-income groups. However, the scheme, loosely modelled after the earlier Mera Pakistan Mera Ghar programme, may face significant challenges, including a lack of clarity on eligibility and structure, persistently high land and construction costs, and limited affordability among target beneficiaries. Despite a Rs5 billion subsidy proposed in the 2025-26 federal budget, concerns remain over banks' willingness to lend aggressively, given Pakistan's mortgage-to-GDP ratio is still languishing below 1%. Experts caution that unless the scheme is backed by strong institutional coordination, tax reforms, and public awareness, it may fall short of its objectives — much like the previous attempt, where only Rs235 billion was approved out of Rs514 billion in financing requests. The State Bank of Pakistan (SBP) will oversee the rollout of the new scheme. While the proposed housing finance will subsidise a portion of the markup rate to make it affordable for beneficiaries, the eligibility criteria, categories, name, and structure may differ from the previous initiative. Ibrahim Amin, a real estate valuation and engineering expert, noted that the government is considering the launch of the housing finance scheme due to favourable conditions following a gradual reduction in the policy rate, which may decline further in the coming months if macroeconomic indicators improve. "The housing finance scheme will help revitalise economic activities in real estate, construction, and allied sectors, attracting local and foreign investments from residents and overseas Pakistanis while generating jobs across the entire ecosystem," said Amin, who is also the CEO of TriStar International, a real estate valuation company. He added that the scheme could improve sales of hundreds of unsold or undersold housing units in private residential societies across major cities, which have struggled due to rising inflation and declining purchasing power among target buyers. The government has also announced tax relief on property transactions, which may further stimulate the market in the coming months, Amin noted. The previous subsidised housing finance scheme, introduced in 2019 by the central bank, was discontinued by mid-2022 due to high interest rates. Despite overwhelming public responsewith participating banks receiving financing requests worth Rs514 billiononly Rs235 billion was approved across thousands of applications. "The banking regulator, alongside commercial banks, played a crucial role in facilitating the public through awareness campaigns, dedicated facilitation desks, and revised scheme conditions," Amin said. "The initiative also boosted economic activity in real estate and construction while providing long-term consumer financing opportunities for banks." He emphasised that Pakistan's banking system now has a well-tested and researched framework for housing finance, with stakeholders fully prepared to execute their roles. "It is high time for the government to announce the policy to benefit the masses," he remarked. Pakistan currently faces an estimated shortage of 1.2 million housing units relative to its population, while its mortgage-to-GDP ratio remains below 1%the lowest in the region. "Reviving affordable housing finance could play a crucial role in addressing both housing needs and broader economic recovery," said Karachi-based realtor Maaz Liaquat. He pointed out that high land and construction costs have dampened bookings for small and mid-sized apartments in major cities in recent years. The new subsidised financing scheme could support builders and developers of ready and under-construction vertical housing projects, attracting overseas Pakistanis and middle-income buyers. Liaquat suggested that the government collaborate with district authorities to streamline real estate regulations while reducing the tax burden on scheme beneficiaries to make homeownership more affordable for first-time buyers.
Express Tribune
2 days ago
- Business
- Express Tribune
SBP reserves drop by $2.7b
The central bank said in its latest weekly update on Thursday that the country's foreign exchange reserves, held by the SBP, decreased $66 million to $8.15 billion in the week ended January 5, 2024 due to debt repayments. photo: file Listen to article Pakistan's foreign exchange reserves held by the State Bank of Pakistan (SBP) fell sharply by $2.66 billion during the week ended June 20, 2025, bringing the total to $9.06 billion. "This marks the second-largest weekly decline since data was available, ie, 2011," noted Arif Habib Limited (AHL). The steepest fall on record was the $2.91 billion drop seen in March 2022. The decline was driven primarily by external debt repayments by the government of Pakistan, with a major portion attributed to the repayment of commercial loans, the State Bank said. However, the pressure on reserves is expected to ease in the coming days. During the current week, the SBP has received $3.1 billion in fresh commercial borrowing and over $500 million from multilateral sources. These inflows are expected to be reflected in reserves data for the week ending June 27, 2025, the central bank added. As of June 20, 2025, Pakistan's total liquid foreign currency reserves stood at $14.4 billion, comprising $9.06 billion held by the SBP and $5.33 billion held by commercial banks. JS Global Head of Research Waqas Ghani Kukaswadia stated that the drop in reserves is likely due to a payment rollover and the corresponding inflows should appear in next week's figures. The situation highlights the sensitivity of Pakistan's reserves to debt repayments, even as incoming inflows are expected to stabilise the outlook in the short term. Moreover, as of May 2025, Pakistan's Roshan Digital Account (RDA) gross inflows reached $10.381 billion. Of the total funds received, $1.787 billion has been repatriated by account holders while $6.648 billion has been utilised within the country. Consequently, the net liability stood at $1.947 billion, representing the portion of funds available for potential repatriation, according to AHL. Furthermore, the Pakistani rupee saw a slight uptick against the US dollar on Thursday, appreciating by 0.02% in the inter-bank market. By the end of trading, the local currency closed at 283.67, marking a modest gain of five paisa compared to Wednesday's close at 283.72. Globally, the US dollar weakened, hitting multi-year lows against both the euro and the Swiss franc. The decline was driven by growing concerns over the future independence of the US Federal Reserve. Meanwhile, gold prices in Pakistan rose, though international bullion rates saw a slight decline, influenced by reduced geopolitical tensions in the Middle East and ongoing uncertainty surrounding the US Fed's rate outlook. In the domestic market, the price of gold increased by Rs1,335 per tola, reaching Rs356,000.
Business Recorder
2 days ago
- Business
- Business Recorder
PKR under pressure: Balancing act by SBP
The pressure from imports is gradually intensifying. The payment squeeze situation has persisted since January, becoming somewhat of a new normal. However, growing anxiety is now contributing to the depreciation of the Pakistani Rupee (PKR). "Dollars aren't short, just expensive," asserted a bullish treasury officer in defense of the State Bank of Pakistan (SBP). "There's no panic in the market." However, sentiments vary among banks. "For us, it's panic," lamented a senior executive from another bank experiencing significant strain. "We are settling oil L/Cs at PKR 287-288, as we have to offer better rates to attract remittances." He anticipates that the currency will inevitably slip further. These mixed sentiments among bank treasuries stem from implicit intervention by the SBP, a practice ongoing for over a year. The SBP buys surplus dollars from banks while restricting access for banks in need, forcing them to seek additional inflows to manage their outflows. "SBP is metaphorically holding a gun to our heads," expressed a frustrated executive from an affected bank. Conversely, the optimistic banker supports the central bank's stance: "SBP is calm and composed, so there's no need for panic. Soon, SBP reserves will reach $14 billion, positively impacting the PKR and halting further depreciation," he explained. Yet not everyone is convinced. "There's a limit to how long the SBP's strong-arm tactics will work. Natural market forces will eventually prevail," another banker cautioned. While extreme views exist, most treasury officials maintain a cautious outlook. The consensus is that interest rates have bottomed out, aligning with inflation trends. If further cuts occur, they will not exceed 100 basis points from current levels. No one anticipates single-digit interest rates, and a gradual depreciation of the currency seems inevitable. "Previously, SBP allowed depreciation at 5 paisas daily; now it's 15 paisas daily. This measured strategy prevents panic while managing currency depreciation effectively," remarked a third banker. This approach appears prudent, as there is currently no pressure in the open market, nor signs of a currency run. Importers remain steady, and exporters continue to exercise caution. "Remittances are crucial," noted another banker. "If the country maintains strong inflows, the market will function smoothly." However, the current budget lacks explicit support measures for remittances. Although absent from the budget document, the finance minister has reassured banks of continued support. The SBP Governor recently echoed this sentiment, confirming continuity in some form. The situation should soon clarify, but without robust support for remittances, currency pressures will likely accelerate. The Real Effective Exchange Rate (REER) stands between 97-98, indicating that the PKR is not overvalued. Crucially, SBP reserves are down to $9 billion, although the SBP Governor projects they will reach around $14 billion by the end of June. For now, optimism is cautious, and fingers remain crossed.
Business Recorder
2 days ago
- Business
- Business Recorder
Quarterly Payments Systems Review report
EDITORIAL: The State Bank of Pakistan's Quarterly (January-March) Payments System Review report — bafflingly limited to just three months, at best described as extremely short term — has revealed some disturbing though not surprising data: 89 percent of Pakistan's retail payments are conducted through digital channels but represent merely 29 percent of the value of total transactions; and paper-based and over-the-counter (OTC) payments processed through bank branches and branchless banking agents account for only 11 percent of total volume and 71 percent of total value. This discrepancy can partly be explained by the informal economy which is projected at around 50 percent of the formal economy — a projection at best given that quantifying that which is outside the purview of the government statistical machinery is a challenging task at best. The Federal Board of Revenue (FBR), in its indefatigable quest to generate more total revenue each year, focuses on the revenue it could generate if the informal economy is brought into the tax net yet one must not lose sight of the fact that the informal sector provides employment opportunities to hundreds of thousands of Pakistanis who, if left to the formal sector, could not be accommodated. The SBP report noted that Raast (instant payment system processed 371 million transactions worth 8.5 trillion rupees during January-March 2025) and RTGS (real time gross settlement system handled 1.5 million transactions amounting to 347 trillion rupees) have been instrumental in accelerating digital payments. These numbers are impressive; however, it would have been useful to identify how many of these transactions were carried out by the informal sector. Hernando de Soto maintained that in countries where the informal sector is sizeable macroeconomic data can never be reliable because the informal economy has a strong preference to using paper-based or cash for transactions. And added credibly that the informal sector gives birth to a situation whereby the influence of informal activities in an economy can only be measured through indirect means with a long information delay. Be that as it may, the reason behind the greater use of paper- or cash-based transactions in Pakistan's case is not only due to low levels of literacy but also due to rampant digital fraud that is reported in the media attributable to insufficient investment in digital security. Two recent rather disturbing cases of digital fraud relate to the pensioners and the vulnerable recipients of Kifaalat, the Benazir Income Support Programme's (BISP's) quarterly cash disbursements. At present, BISP beneficiaries who report fraud complain that FIA does not proactively investigate as sums involved are very small; however, this leakage can be plugged if the government invests appropriate amounts in not only education but also in providing security in digital payments. And, needless to add, the rather frequent cessation of internet services in Pakistan, ostensibly for security reasons, compromises the reliability of the use of digital services that requires an urgent revisit. To conclude, while the digital imprint on transactions within Pakistan is certainly rising yet there is a need to take other measures in order to ensure that it is strengthened with time — measures that must include dealing with security concerns, by not through shutting down the internet which has also had disastrous consequences on those who run their business on the net, but through law enforcement agencies. Copyright Business Recorder, 2025
