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  • SBP sells treasury bills worth Rs415.72 billion at above 11pc cut-off yield

    SBP sells treasury bills worth Rs415.72 billion at above 11pc cut-off yield

    KARACHI: State Bank of Pakistan (SBP) raised an amount of Rs415.72 billion through sale of Market Treasury Bills (MTBs) at an auction held on Wednesday.

    The SBP received bids for three- and six months securities at realized value of Rs2,730 billion at face value of Rs2,799 billion. The central bank did not receive bids for 12-month maturities.

    The bids were mainly received in 3-moth MTBs at realized amount of Rs2,729 billion at face value of Rs2,798.74 billion. The central bank received bids for six-month treasury papers of Rs758 million at face value of Rs800 million.

    The SBP accepted 3-month maturities at realized value of Rs415.58 billion at face value of Rs426.103 billion. The cut-off yield was at 11 percent.

    The central bank accepted bids in six-month maturities of Rs142.14 million at face value of Rs150 million. The cut-off yield was at 11.0899 percent.

    The SBP raised the funds above the auction target of Rs350 billion.

    The cut-off yield is higher than the key policy rate of 10.75 percent.

    Experts said that the banks were anticipating further hike in interest rate in upcoming policy. The expectation of increase in interest rates showed the interest of banks in short-term maturities.

  • Remittances increase to $16.1 billion in July – March

    Remittances increase to $16.1 billion in July – March

    KARACHI: Overseas Pakistani workers have remitted $16.1 billion during first nine months (July – March) 2018/2019 as compared with $14.8 billion in the same period of the last fiscal year, showing 8.74 percent growth.

    State Bank of Pakistan (SBP) on Wednesday said that during March 2019, the inflow of worker’s remittances amounted to US $1745.80 million, which is 10.73 percent higher than February 2019 and 3.20 percent lower than March 2018.

    The country wise details for the month of March 2019 show that inflows from Saudi Arabia, UAE, USA, UK, GCC countries (including Bahrain, Kuwait, Qatar and Oman) and EU countries amounted to US $405.87 million, US $378.14 million, US $271.11 million, US $281.26 million, US $167.80 million and US $44.20 million respectively compared with the inflow of US $427.62 million, US $424.89 million, US $247.17 million, US $258.96 million, US $183.79 million and US $58.91 million respectively in March 2018.

    Remittances received from Malaysia, Norway, Switzerland, Australia, Canada, Japan and other countries during March 2019 amounted to US $197.41 million together as against US $202.26 million received in March 2018.

  • SBP to be given independence for money market discipline

    SBP to be given independence for money market discipline

    ISLAMABAD: The State Bank of Pakistan (SBP) to be given operation and institutional independence for bringing discipline in money market.

    According to ‘Medium-Term Economic Framework’ launched by Finance Minister Asad Umar on Monday, the government is considering giving the SBP greater operation and institutional independence to bring greater discipline in money market and exchange rate regimes.

    It said that the State Bank Act would be amended to further strengthen the autonomy of SBP and clarify its objectives and functions.

    “Specifically, the government, in consultation with SBP and other stakeholders, will finalize proposals to facilitate implementation of flexible inflation targeting as envisage in SBP Vision 2020,” it added.

    The existing exchange rate arrangements and possible limits of government borrowing from SBP will also be clarified in line with prioritizing price stability as an objective of monetary policy.

    The framework said that the exchange rate is one of the most important prices and is determined by underlying economic fundamentals.

    These fundamentals ensure that it would adjust to its equilibrium value over the long run.

    As mentioned earlier, Pakistan’s approach over the last two years to manage the exchange rate was structurally flawed, as it focused more on the overriding desire to avoid unnecessary volatility in the foreign exchange market and avoid fiscal cost of exchange rate adjustment, even when it was needed.

    “This led to persistent overvaluations of rupee contributing to a massive increase in trade and current account deficits; which was the central to the macroeconomic instability faced by the country today.”

    The recent pressures on external fronts are a manifestation of the misaligned exchange rate for the past two years.

    Against this background, the principal idea now is to enshrine an exchange rate policy which enhances competitive of Pakistani exports, by avoiding the persistent overvaluation of rupee.

    Accordingly, the Pakistani rupee has depreciated around 33.4 percent since November 2017. The depreciation has moved the exchange rate to a level, which is more reflective of economy’s medium-term needs and market conditions while at the same time minimizing disorderly fluctuations.

    The near-term goal of this policy is to move towards an exchange rate regime which SOEs not allow overvaluation of rupee on persistent basis.

  • Rupee gains 20 paisas in open market

    Rupee gains 20 paisas in open market

    KARACHI: The Pak Rupee gained 20 paisas in open market on Saturday owing to monitoring launched by exchange companies after meeting with State Bank of Pakistan.

    The buying and selling of dollar was recorded at Rs142.30/Rs142.80 from previous day’s ending of Rs142.50/Rs142.50 in cash ready market.

    The representatives of Forex Association of Pakistan (FAP) held meetings during last two days with State Bank of Pakistan to control the higher demand of dollar in open market.

    In the last day meeting the FAP decided that it would not entertain non genuine buyers of dollars and would monitor the trading in the open market.

  • Exchange companies stop dollar selling except for needy customers

    Exchange companies stop dollar selling except for needy customers

    KARACHI: Foreign exchange companies have decided to stop sale of dollars except for needy customers for education, health and Hajj, said Malik Bostan, President, Forex Association of Pakistan (FAP) on Friday.

    The representatives of FAP today again held a meeting with Syed Irfan Ali Shah, Executive Director of State Bank of Pakistan (SBP) to discuss reducing dollar rate and availability of the greenback to customers in the open market.

    After the conclusion of the meeting, the FAP decided that US Dollars should only be sold to real customers, including persons going abroad for heath and education. Further, buyers of dollars for Hajj and Umrah should also be entertained, it was decided.

    It is decided that dollars should not be sold to people, who wanted to create uncertainty in the market.

    Malik Bostan urged people to invest in local money instead of US dollar. “We should shun use of dollar to strengthen our economy,” he said.

    He appealed the people that if they avoid dollar buying for few days then its value would automatically reduce.

    Malik Bostan said that at present the dollar demand is around $7-8 million and in contrast the supply is only $4-5 million.

  • Bill to amend foreign exchange regulations presented

    Bill to amend foreign exchange regulations presented

    ISLAMABAD: The finance ministry has presented a bill in the parliament to amend foreign exchange regulations to stop illegal transactions.

    A statement on Thursday said that in order to prevent illegal foreign exchange transactions, The ministry of finance has proposed to amend the Foreign Exchange Regulations Act (FERA) 1947 by introducing a bill “FER (Amendment) Act 2019”, in the National Assembly to empower the State Bank of Pakistan (SBP) to regulate foreign exchange regime in the country more effectively.

    The proposed amendment has been approved by the Federal Cabinet and transmitted to Parliament for enactment.

    The amendments would substantially strengthen the SBP’s powers to issue necessary regulations/instructions relating to inland movement of foreign currency and enable it to monitor such movement.

    The measure is a part of government of Pakistan’s efforts to enhance the transparency of financial transactions.

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  • Rupee value to strengthen in coming days, SBP tells FAP members

    Rupee value to strengthen in coming days, SBP tells FAP members

    KARACHI: State Bank of Pakistan (SBP) has said that the rupee value to stabilize as large payment was made last week.

    Talking to representatives of Forex Association of Pakistan (FAP) on Thursday, Executive Director of SBP Syed Irfan Ali Shah said that last week large payments made last week and now the local currency would not devalue further, said a FAP press release.

    He further said that the government had no intention to devalue the local currency.

    He said that the local currency would depreciate with rising demand in interbank foreign exchange market but it would stabilize on easing demand.

    “It has been seen today the rupee value strengthen in the interbank bank,” he said and added that the rupee value would further strengthen in coming days.

    He said that the trade deficit would reduce to $12 billion from previous year’s $18 billion. He also hoped that the exports would grow to $28 billion from $23 billion.

    The SBP executive director said that friendly countries including Saudi Arabia, Dubai, Malaysia, Singapore, Australia and China would make investment of around $20 – 30 billion next year. This will increase foreign direct investment, he added.

    The government is also making all efforts to send skilled laborers abroad to increase workers remittances. These efforts will help increasing workers remittances from $18 billion to $25 billion, he added.

    Earlier, FAP President Malik Bostan expressed reservations on the shortage of dollar in free market.

    Bostan attributed the rising dollar rate to interbank because before the visit of IMF delegation on March 05 the interbank rate was Rs138.50 to the dollar and since than the dollar value increased by Rs3 to Rs141.50. This trend also prevailed in free market, he added.

    He said that the government had admitted the IMF conditionalities on exchange rate policy that should be based on market forces.

    Due to these conditions there are 80 percent buyers and 20 percent sellers in the cash free market, he added.

    Malik Bostan said that the dollar demand was also higher due to Hajj season.

    He also pointed out to a comment by Dr. Ashfaque Hassan, Member Advisor Council, who said that the dollar would reach Rs150. Such statements send negative message to the public, he added.

    Malik Bostan said that the dollar demand was also rising due to conditions imposed on non-filer of income tax returns by the government as people had investment option in dollar, gold and prize bonds.

  • Pakistan’s foreign exchange reserves increase to $17.397 billion

    Pakistan’s foreign exchange reserves increase to $17.397 billion

    KARACHI: The foreign exchange reserves of the country increased by $1.924 billion to $17.397 billion by week ended March 29, 2019 as against $15.473 billion a week ago, State Bank of Pakistan (SBP) said on Thursday.

    The reserves held by State Bank increased by $1.931 billion to $10.492 billion by week ended under review as compared with $8.561 billion by week ended March 22, 2019.

    The SBP said that during the week ending March 29, 2019, the central bank received inflow of RMB 15 billion equivalent to US$2.2 billion as proceeds of the loan obtained by the government of Pakistan from China. After taking into account outflows relating to external debt and other official payments, SBP reserves increased by US$1,931 million during the week.

    The reserves held by commercial banks, however, declined by $9 million to $6.904 billion from previous week’s level of $6.913 billion.

  • SBP to raise Rs3,600 billion through sale of securities

    SBP to raise Rs3,600 billion through sale of securities

    KARACHI: The State Bank of Pakistan (SBP) will raise Rs3,600 billion through sale of bonds during next three months for repayment against matured securities.

    According to auction target calendar issued by State Bank of Pakistan (SBP) on Wednesday, around Rs3,600 billion would be raised through auction of Market Treasury Bills (MTBs) and Pakistan Investment Bonds (PIBs).

    The SBP to conduct six auctions of MTBs during April to June 2019 to raise Rs3,300 billion. The amount of maturity is Rs3,100 billion.

    The central bank will also conduct three auctions of PIBs for generating Rs300 billion. The amount of repayment against matured PIBs during the period is Rs434.45 billion.

  • SBP issues regulations for electronic money institutions

    SBP issues regulations for electronic money institutions

    KARACHI: State Bank of Pakistan (SBP) on Monday issued regulations for electronic money institutions in order to promote financial inclusion in the country.

    In a statement, the central bank said that in order to foster innovation in the payments industry and promote financial inclusion in the country, it has been decided to license non-banking entities as E-Money Institutions (EMIs) as per the notified regulations under the powers conferred on SBP by Payment Systems and Electronic Fund Transfers Act, 2007.

    These regulations will remove entry barriers and provide level playing field to EMIs in payment’s arena which will eventually lead to the development of payments ecosystem in Pakistan.

    SBP therefore expects that the prospective EMIs shall offer convenient, cost effective, interoperable and secure digital payment products and services to end users in the country.

    These Regulations shall come into force with immediate effect.

    The objectives of the regulations are included:

    I. To provide regulatory framework for EMIs desirous of offering innovative payment services to the general public.

    II. To prescribe minimum service standards and requirements for EMIs to ensure delivery of payment services in a safe, sound and cost effective manner.

    III. To outline the permissible activities that can be carried out by an EMI and its agents’ network.

    IV. To provide a baseline for protection of EMI’s customers.

    V. To achieve the SBP’s objective of digital payments and financial inclusion.

    The SBP said that Payment Systems and Electronic Funds Transfer Act, 2007 defines e-money as monetary value stored on an electronic device or payment instrument issued on receipt of funds and accepted as a means of payment by entities other than issuer.

    E-money globally is widely used for making retail payments in an economy and has played a crucial role in digitizing different types of payments in various countries.

    Electronic Money Institutions (EMIs) are entities that offer innovative, user-friendly and cost effective low value digital payment prepaid instruments like wallets, prepaid cards, and contactless payment instruments including wearables.

    Globally, these innovative payment instruments have been instrumental in promoting cashless payments like merchant checkouts, e-commerce, transportation and toll payments etc.

    Traditionally, payment instruments in Pakistan are issued by banks without participation of non-banking entities.

    New technological innovations are now enabling non-banking sector to deliver innovative and efficient payment services to consumers at much lower cost.

    These regulations are primarily aimed at removing entry barriers for non-banking entities by providing them a guiding as well as an enabling regulatory framework for the establishment and operations of EMIs in Pakistan.

    These regulations also address potential risks in order to ensure consumer protection in line with legal framework of the country while promoting digital payments and financial inclusion.