Pakistan's Forex Reserves Ease to $18.11 Billion

Pakistan's foreign exchange reserves eased to $18.11 billion in the week ending July 10, from a record $18.25 billion the previous week, a senior central bank official said on Thursday. Reserves held by the State Bank of Pakistan (SBP) fell to $14.64 billion from $14.79 billion a week ago, while those held by commercial banks edged to $3.47 billion up from $3.46 billion, said SBP chief spokesman Syed Wasimuddin.

"The decline in reserves during the week is due to scheduled debt repayments," said Wasimuddin. Pakistan's foreign exchange reserves were boosted in June by inflows of $411 million, including a loan of $191.9 million from the World Bank, and another loan of $196.8 million from the Asian Development Bank.

Higher export proceeds and a record inflow of remittances have helped Pakistan's forex reserves grow steadily. According to official data, remittances rose to a record $11.2 billion in 2010/11 fiscal year, an increase of 25.77 percent compared with the same period last year. In May 2010, Pakistan received $1.13 billion in the fifth tranche of an $11 billion International Monetary Fund (IMF) bailout programme. The two sides are due to meet this month to discuss the possible release of the sixth tranche, though no official date has been decided.

Economic and Business Updates - From 23rd to 29th May, 2011

• The government finalises a consolidated budget of Rs3.854 trillion for the next financial year, envisaging revenue of Rs2.787 trillion, fiscal deficit of Rs912 billion and provincial transfers of Rs1.224 trillion.

• Non-Performing loans post a phenomenal surge of Rs100 billion to hit an all time high of Rs548 billion by the end of last calendar year, posing new challenges and credit risks to growing banking industry.

• The Executive Committee of National Economic Council approves 53 projects worth Rs478 billion, with a foreign exchange component of Rs172 billion in socio-economic sectors.

• The federal budget FY12 will stipulate a three-tier sales tax system of zero, five and 17 per cent, while maintaining higher rates for certain specific industries such as telecom and steel smelters.

• The Economic Survey 2010-11 prepared by the finance ministry indicates that the economy will grow only by 2.4 per cent during the current year, against the target of 4.5 per cent.

• The Asian Development Bank will disburse $200 million to Pakistan before the end of the current fiscal year.

• The Federal Board of Revenue provisionally collects Rs1,257 billion during July-May 2010-11 against downward revised annual target of Rs1,588 billion reflecting a shortfall of Rs331 billion.

• Foreign investors repatriate $650 million abroad on account of profit and dividend in July-April period of fiscal year compared with $609 million of corresponding period of last year depicting an increase of $41 million.

• The government is expected to abolish reduced rate of 4-6 per cent sales tax on local supplies made to unregistered persons of five zero-rated sectors for restoration of standard rate of 17 per cent on sales of these sectors from 2011-12.

• The government is considering a proposal to increase the rate of general sales tax from 17 to 30 per cent for industrial and commercial users of electricity in the next budget to raise additional revenue.

• Due to upward revision in furnace oil prices, the National Power Regulatory Authority approves Rs1.07 per unit increase in power tariff across the board except for those who consume up to 50 units a month.

• The Islamabad High Court dismisses the writ petition filed by the Fauji Fertiliser Company Limited against the Competition Commission of Pakistan regarding conditional approval for the acquisition of Agritech.

• The Board of Investment proposes to set up a new Japan-specific special economic zone in the Sindh Economic Zone offering one million acres of government land with direct access to Port Qasim.

Money Market, Forex and General Upadtes - 26-04-2011

Money Market Updates:

• Money market interbank opened at 11.25 percent offer rate with a high of 11.25 and a low of 11.00. State Bank also conducted an open market operation in which it mopped up Rs11.3 billion at the rate of 12.10 percent for three days to control the market liquidity. Market closed at 11.00 percent which shows that the open market operation wa not successful.

Forex Market Updates:

• Interbank dollar market opened at 84.50/55 with a high of 84.70and low of 84.46. Dollar has been showing a deprecating trend sich a month and is now gradually showing an appreciating trend due to few oil payments in the market. Interbank closed at 84.64/68.

General Market Updates:

• During Jul-Feb FY11, Pakistan's current account deficit was only $98.0 million against $3,027 million in the corresponding period in FY10. The improvement in the current account has pushed Pakistan's FX reserves to record highs, while the PKR remains stable.

• The Sensitive Price Indicator (SPI), for the week ended on April 21 for the lowest income group up to Rs.3,000 has registered a nominal increase of 0.11 percent over the previous week.

• Pakistan's liquid foreign reserves increased by $ 58.8 million to $ 17.3761 billion on April 16, at the back of rising home remittances and exports receipts. The foreign reserves with SBP stood at $ 13.9096 billion while the net foreign reserves held by banks went up to $ 3.4665 billion.

• The government on Wednesday raised a staggering sum of Rs232 billion from the banking system reflecting its increased dependence on borrowed money while the eagerness of the banks to invest in the security papers was also visible. However, the government has now been making extensive borrowing from the scheduled banks offering risk-free return of up to 13.8 per cent.

Forex and General Upadtes - 28-01-2011

Forex Market Updates

Pakistan’s total liquid foreign exchange reserves increased to an all-time high $17.3 billion level on the constant inflows of remittance, State Bank of Pakistan (SBP) latest statistic said on Thursday. On January 22, the foreign reserves held by central bank amounted to $ 3.7391 billion whereas net reserves deposited by banks other than SBP stood at $ 3.561 billion. Last week, the total foreign exchange reserves stood at $17.2816 billion.

General Updates

UBL is Pakistan’s second largest private bank. In 2002, a consortium consisting of Bestway Group and Abu Dhabi Group acquired 51 percent of UBL shares together with management rights and control of bank through Government of Pakistan’s privatization process. Consortium currently owns 61.37 percent of bank with Bestway Group at 31.07 percent and Abu Dhabi Group at 30.30 percent. After this investment, management rights and control of bank will continue to remain within the same consortium. No changes are

being made in senior management or in board of directors.

Qubee, a 100 percent shareholder subsidiary of Augere, has planned to expand its advanced Internet technology to reach millions of customers in several new cities with the handsome investment of $150 million by end 2011. 

Refineries have increased prices of lube base oil by 15 percent in the past four months. The new increase would result into Rs 8-10 per litre price hike of all lubricants. He said since December, this is third time that base oil prices have been increased without any justification or taking lubricants manufacturers into  confidence. It is said that the Refineries have created artificial shortage of base oil in the local market, which is causing price increase.

Money Market Updates

The spread of the banking sector has slightly declined by one basis point (bps) to 7.46 percent in the outgoing calendar year 2010 as compared to 7.47 percent in 2009. The average lending rate for the year 2010 stood at 13.39 percent as against 13.98 percent in 2009; while average deposit rate stood at 5.93 percent as compared with 6.51 percent in 2009. In December, spread on outstanding loans averaged 7.61 percent year-on-year, up 26 bps from last year. The lending rate was up 3 bps on yearly basis, while deposits rate was

down 23 bps to 5.91 percent. On a monthly basis, spread rose seven bps from 7.54 percent in November 2010. Up-tick in spread, especially in the later part of the year, is likely to aid Net Interest Margins (NIM) of banks