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Rs 15.00 | Vol XIII No 207 I 12 Pages I Islamabad Edition
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Dollar breaks shackles as exchange companies remove ‘Dollar cap’ g
secretary exchange companies association of pakistan says greenback will be traded upwards of 254, from today
profit report
T
Shahnawaz ali
he exchange companies association of pakistan on tuesday announced that they would no longer be going forward with the “dollar cap”. in a statement, the secretary ecap Zafar paracha said that, “ the association was withdrawing the cap on the us dollar in the “nation’s interest” as the limit was causing adverse effects.” What did the ECAP say? “as a result (of the cap), the business was shifting from official channels to the grey ones, hurting not only the reserves but also dealing losses to the exchange companies,” Zafar paracha added. he further said that once the dollar was allowed to trade at the market value, the customers would automatically shift from the grey market to the legitimate channels. talking to profit, the chairman ecap malik bostan said that, “neither was the dollar cap yielding positive results for the exchange business nor was it proving to be beneficial for the country.” he informed that the companies had to dump a majority of their remittance earnings in the interbank
market due to high interbank demand for imports, and the open market was more keen on buying, than it was on selling. The Regulator vs The Regulated? in an attempt to regulate the forex reserves, the state bank of pakistan suspended 11 outlets of 8 exchange companies on monday. the outlets were found guilty of hoarding dollars and violating the regulatory restrictions. however, malik bostan, chairman ecap told profit, that it was a mere coincidence for these two events to occur one after the other. “the state bank had been informed of the decision, prior to the announcement.” malik bostan, chairman ecap told profit. talking to profit, he said that, “the regulator does not meddle in the open market rates, its only concern is to regulate the fee etc.”. he further added that the deputy governor of the state bank will be intimated with the details of this decision in a meeting that is to occur on the 25th of January. the office of the sbp’s spokesperson, however, failed to confirm the information of any such intimation. What is Happening with the dollar rate? the fact that there was an arbitrage left in the dollar exchange market, begs the question how that gap was created? to un-
derstand that we need to understand the exchange rate. it is now an open secret that the state bank exchange rate is understated as compared to the market value. as a result, as of right now, there are three prices for the dollar. the state bank of pakistan’s exchange rate, the exchange companies’ rate and the actual market rate, which in these particular circumstances is also called the “black market rate”. because the actual market rate is anybody’s guess. the sbp rate hovers around 230 rupees/usd. the recognised exchange companies in a response to that, placed a dollar cap, whereby their prices were supposed to be in a prescribed range of the state bank’s rate. and the market, as it mostly is, would be determined by the market forces. with a pegged official rate, the open market rate has been considerably higher, and on the rise in the last few months. what does this mean for the exchange rate market? this means that the demand for dollars, not just as a currency but as a store of value also increases making it, as miftah ismail calls it, “a one way bet”. people start to buy dollars as if they are a housing society’s files, and much like the former example, “dealers” erupt in every nook and cranny, looking to make pennies on the dollar (literally).this creates an even higher open market rate, creating ample room for the practice of hawala and hundi that keeps on increasing. in such a circumstance, for the open market players to have a cap on the dollar’s price would not only be detrimental, but more importantly it will increase the dollar’s rate even further. the decision of the open market players to hence remove the cap is in response to this, not-so-sudden, realisation. what prompted this decision? a crackdown? a gap in the market? exchange companies’ business interests? the bottom line is; “their bottom-line”, if nothing else.
Pakistan, IMF start virtual negotiations to build consensus on ninth review profit report Shahzad Paracha
pakistan and the international monetary fund (imf) have started virtual negotiations to build consensus on the ninth review, said a senior official of the finance ministry, on tuesday. the pakistani team has started an exchange of information with the imf, sources added. they said the government has communicated to the imf that it would meet the revenue target set for the current fiscal year. in this regard, the pakistani team has stressed that the federal board of revenue (fbr) will collect rs 80-90 billion in the remaining period of financial year 2022-23 by imposing a 17% sales tax on petroleum products. in addition, fbr also plans to impose a sales tax or increase sales tax/excise duty on beverages, and cigarettes and withdraw sales tax exemption on the import of inputs used by the export sectors. sources said that the first session between the imf and the pakistan team remained
inconclusive but both sides will hold a virtual meeting on wednesday again. meanwhile, addressing the launch of a loan scheme in islamabad, prime minister shehbaz sharif on tuesday said that pakistan had given a “clear message” to the imf about the country’s desire to complete the ninth review of the $7 billion extended fund facility (eff). “we are ready and want to sit down regarding your conditions so that it can be concluded and pakistan can move forward,” the premier added. he stated that pakistan had been “given a clear message left and right” that the country would not be abandoned but that it was necessary for it to “stitch” the imf programme. sharif said that the government had written to the international money lender. “i spoke to the imf managing director two weeks ago and we have proactively approached them that we want to complete the ninth review without delay so that the programme moves forward, in addition to other multilateral and bilateral programmes.”
NA without opposition as speaker ‘approves’ resignation of 43 more PTI MPs iSLAMABAD Staff rePort
Just a day after pakistan tehreek-i-insaf (pti) withdrew the resignations of its remaining 44 members of the national assembly whose resignations had yet to be accepted by the speaker, raja pervaiz ashraf tuesday approved the letters of an additional 43 mps, geo news reported, citing sources. officials from the speaker’s office requesting anonymity said ashraf had approved the resignations in recent days and had already sent a summary recommending their de-notification to the election commission of pakistan (ecp). the latest development brings the total number of opposition mps whose resignations have been accepted to 112. the approval of the resignations comes a day after at least 45 pti mps attempted to meet the speaker in order to withdraw their resignations.
through the move, the party had aimed to appoint one of its members as the leader of the opposition in the national assembly, and asad umar, secretary general of the opposition party, said monday they had also informed speaker ashraf of the decision via email. however, the development means that only dissident lawmakers of the party, headed by “turncoat” opposition leader raja riaz ahmed, remain in the national assembly at present. fawad chaudhry, senior vice president of the party, tuesday said the main reason for returning to the assembly was to remove ahmed from the post since the parliament had “no importance”. he tweeted: “right now, shehbaz sharif has lost the support of 172 members and is relying on lotas (turncoats) to save his government.” more than 120 mps loyal to former prime minister imran khan resigned en masse on april 11, two days after he
was ousted following a contentious vote of no-confidence marred by unprobed allegations of military intervention. former deputy speaker of the national assembly, Qasim suri — who was performing his duties as acting speaker after then-incumbent asad Qaiser’s resignation — accepted the resignation letters on april 15. however, once ashraf was elected as the speaker, he decided to verify the resignations by interviewing lawmakers individually, but instead decided in favour of stalling the entire process by blaming it on the lawmakers’ reluctance to step down. such situations require a lot of thought process, he had said, declaring he will not accept the resignation letters until he was completely satisfied they were not stepping down under pressure. however, last week, after khan hinted at “testing” the prime minister through a confidence vote in a tit-for-tat
move similar to the one he himself had faced, ashraf accepted 35 resignations
from pti lawmakers and sent the list to the commission.