Oct 16 -
Cap on exchange rates unlikely
The State Bank is unlikely to reintroduce a trading band on
inter-bank foreign exchange rates as a policy measure but it may try it on
certain occasions when the rupee falls prey to speculative forces and other
tools to shore it up fail.
A well-placed SBP source told that the reason why SBP
Governor Dr Ishrat Husain had warned banks last week of another trading band was
that he wanted to contain pro-dollar sentiments.
The SBP chief had told last week that he would never rule out
reintroduction of the band if the monetary measures taken by SBP do little to
stabilize the rupee. He had made this statement also in a separate interview
His warning had some impact on the inter-bank market where
the rupee started recovering part of its lost strength vis a vis the dollar. It
also lifted the rupee in kerb.
But SBP sources say there is no possibility of reintroducing
a permanent trading band on inter-bank foreign exchange rates as it would be
tantamount of reverting to a fixed exchange rate regime.
On July 20, SBP removed the then existing trading band to let
the rupee really float free. The band was introduced immediately after SBP had
announced on May 18, 1999 to free float the rupee.
"We managed to live with a trading band because we were
not in the IMF programme," said head of a major local bank. "Now that
we have to fulfil various conditions set for seeking an IMF package
reintroducing the band is just impossible."
SBP Governor Dr Ishrat Husain has already said that the rupee
had fallen to 58 to a dollar in line with the demand of the IMF. He has made a
vow to reverse the additional decline in the rupee value because he thinks
economic fundamentals can keep the rupee-dollar parity at this level.
Rescheduling of debt service payments on cards
Pakistan's debt service payments worth 2.2 billion dollars
are expected to be rescheduled under the IMF financial package to provide
balance of payments support, sources said.
It is for the second time that debt service payments would be
rescheduled. The bilateral donors including Paris Club members rescheduled 3.1
billion dollars payment due from July 1, 1998 to 31st December 2,000. Islamabad
had approached Paris Club in January 1999.
Official sources said that the financial package is designed
to take care of the current account deficit for about a year, though bulk of the
disbursements would made before end of June 2001. The disbursements would
include 520 million dollars out of the 800 million dollar Asian Development
Bank, the 350 million dollar World Bank Structural Adjustment Loan and major
portion of the IMF financial assistance of 600-700 million dollars. The
financial package is estimated at 3.5- 4 billion dollars including multilateral
assistance of 1.5-1.6 billion dollars.
Farm loans decline by 8%
The overall farm credit disbursement in the four provinces
declined by 7.99 per cent during the 1999-2000 financial year, sources in the
Agricultural Development Bank of Pakistan (ADBP) said on Tuesday.
In its report on "Agricultural Credit 1999-2000",
which will be submitted before the Federal Committee on Agriculture (FCA) on
October 12, the ADBP will inform the FCA that disbursement in Balochistan
declined by 59.7 per cent, Northern Areas 24.42 per cent, AJ&K 16.69 per
cent, NWFP 6.48 per cent, Punjab 6.47 per cent and Sindh 4.36 percent.
Giving the overall credit disbursement picture for the year,
the ADB report will say that a total of Rs 40.188 billion was disbursed during
this period — Rs 30.920 billion production loan and Rs 9.268 billion
development loan — which is 8 per cent less than the preceding year.
The rupee rose to 58.50/58.60 for spot buying and selling in
the inter-bank market up five paisa for selling against the previous close of
The rupee has so far gained 120 paisa against the dollar
since October 4 when the State Bank hiked up its repo rate from 12 to 13 per
cent and T-bills rates by 2.00-2.23 per cent and increased cash reserves
requirement for banks from five to seven per cent.
Pakistan's liquid foreign exchange reserves stood at $1.009bn
on Oct 7, according to the latest statistics released by the SBP on Thursday.
The statistics show that approved forex reserves stood around $826m whereas
balances held abroad totalled $183m. The total reserves also include around
$439m worth of fresh foreign currency deposits of the banks placed with the
HBL incentive scheme
State-run Habib Bank Ltd has introduced a new incentive
scheme to help the defaulters pay off their outstanding debts.
Under the scheme the borrowers can settle up to Rs2.5 million
worth of loan defaults outstanding for two years or more by paying only the
principal amount of loan — and no mark-ups at all.
Pakistan Industrial Credit & Investment Corporation (PICIC)
on Friday announced to give 10 per cent cash dividend and 15 per cent bonus
shares to their share holders for the year ended June 30, 2000.
Gold prices up
Gold prices, after falling last week, again jacked up on
Wednesday by Rs 80 per 10 grams to Rs 5,430 per 10 grams from Rs 5,350 per 10
grams on Tuesday.
Shell increases furnace oil prices
Shell Pakistan Limited (SPL) on Tuesday took the lead in
raising the prices of furnace oil by Rs 316.25 per metric ton to Rs 12,535 PMT
as compared to Rs 12,218.75 PMT.
National Refinery Limited (NRL) and Pakistan Refinery Limited
(PRL) on Monday raised the fuel prices to Rs 10,750 PMT from Rs 10,225 PMT.
EoIs for MCB shares
Privatization Commission (PC) has invited expression of
interests (EoI) for the sale of 24% (53m) shares of Muslim Commercial Bank by
Cars, bikes dearer
Honda (City and Civic) and Nissan Sunny have become costlier
by Rs 20,000-30,000 and Rs 20,000-50,000 per unit on Monday.
Besides, Honda and Yamaha motorcycles prices have also been
jacked up by Rs 1,000 per unit and Rs 1,020-1,050 per unit respectively..