Miftah moves to pacify markets, says imports under control

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In a bid to pacify markets, Finance Minister Miftah Ismail said on Wednesday that Pakistan’s import bill till July 18 was $2.6 billion, 20% below last year’s level.

“We will end the month at $5.5 billion,” he wrote in a tweet. “The runaway imports from last year have come under control this month thanks to the State Bank of Pakistan’s (SBP) measures.”

He promised that the government would continue with these measures in the near term to ensure that imports and the current account deficit remained under control.

His comments come as the rupee is plunging in the currency market and the KSE-100 index is witnessing selling pressure.

On Wednesday, the local currency lost over Rs3 per dollar in intra-day trading and it was hovering at Rs225 against the greenback.

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It closed at a record low of 221.99 against the US dollar on Tuesday. The rupee took a massive hammering throughout the trading session, and traded at 224 at one point before recovering slightly to end with a depreciation of 3.06%.

The ongoing political uncertainty added to investors’ woes at the Pakistan Stock Exchange, as the benchmark KSE-100 Index ended the trading session 978 points lower on Tuesday. At present,the market is down by an additional 55.57 points or 0.14% to trade at 40,333.5 at 10:43 AM.

On Tuesday, Fitch Ratings also downgraded Pakistan’s outlook from stable to negative in view of the significant deterioration in the country’s external liquidity position and financing conditions since early 2022.

Fitch saw considerable risks to implementing the International Monetary Fund (IMF) programme and to continued access of Pakistan to financing after the programme’s expiry in June 2023 in a tough economic and political climate.

Its announcement comes after Moody’s Investors Service downgraded the country’s outlook to negative from stable last month, citing Pakistan’s heightened external vulnerability risk and uncertainty around the sovereign’s ability to secure additional external financing to meet its needs.

However, Moody’s announcement came when talks with the IMF were still ongoing. Last week, the IMF reached a staff-level agreement with Pakistan authorities.

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