KARACHI: Pakistan Stock Exchange (PSX) hosted a meeting where the top management of PSX including Chairperson PSX, Dr. Shamshad Akhtar; MD & CEO PSX, MFarrukh H. Khan, and Board Members PSX met with Acting Governor SBP, Dr. Murtaza Syed, and Deputy Governors, Ms. Sima Kamil & Dr. Inayat Hussain, says a Press release.
Also participating in the meeting were Chairman AKD Group & Pakistan Stock Brokers Association (PSBA), Aqeel Karim Dhedhi; Chairman Arif Habib Group, Arif Habib; CEO Bank Alfalah Limited, Atif Bajwa; CEO Atlas Honda Limited, Saquib Shirazi, and other key market participants.
At the meeting, a wide ranging and robust discussion was held on broader economic issues and on matters impacting the capital market more directly. The Acting Governor delivered a presentation to the participants at the meeting wherein a comparison of Pakistan’s econonomy was made with other emerging economies and the fact that Pakistan has performed relatively well in comparison with some countries was highlighted.
Dr. Murtaza Syed talked about the inflation, interest rate, and current account outlook and long term structural aspects of the economy through the presentation. He outlined Pakistan’s external financing needs over the next 12 months, noting that the IMF program ensures that these will be fully met. In fact, thanks to the $4 billion of additional financing commitments from friendly countries that has recently been secured, Pakistan will be over-financed. This will provide an additional boost to Pakistan’s FX reserves in FY23.
Speaking on the occasion, Dr. Murtaza emphasised that extreme pressures on Pakistan’s FX reserves, currency and current account are temporary in nature, and are being forcefully addressed through proactive and concerted policy measures.
On the external sector outlook, Dr. Murtaza elaborated that “the Rupee came under significant pressure during June and July 2022, primarily due to a stronger US Dollar worldwide, the deterioration in the current account deficit, and domestic political uncertainty.” He added, “SBP’s monetary policy stance and measures to reduce the import bill were prudent and necessary for dissipating inflationary pressures and consequently for sustainable growth in the medium-term”.
The Acting Governor SBP stated that imports are expected to decline the in coming months owing to some ease in global commodity prices as well as domestic demand moderation due to policy initiatives. On external sector sustainability, Dr. Murtaza emphasized that uncertainty around the IMF program has been resolved with the announcement that the Board meeting for the next IMF review will take place on August 29th.
He said that the recent rally in the Rupee is on account of a narrowing of the current account deficit and improved domestic sentiment. In this context, it will be important to ensure that imports remain at a sustainable level going forward, including energy imports.
In this context, he noted that it would be prudent to conserve power in residential and commercial activity without affecting the industrial sector. He also emphasized that when the FX market becomes disordely, the State Bank does intervene to calm the markets and will continue to do so, as needed, in the future. At the same time, strong steps to counter any speculation have also been taken, including close monitoring and inspection of banks and exchange companies.
SBP also informed the participants that payments under FX contracts and L/Cs will soon be back to normal. The issue of dividend announced by NBP was also raised and SBP assured an early resolution of the matter. Other issues discussed included margin financing, inclusion of sukuks and TFCs in the definition of ADR, allowing a portion of the Yuan/PKR swap line for capital market investments and ease of opening SCRA accounts. It was agreed
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