Feb 19 -
SBP sucks in Rs15.5bn from money market
Though Pakistan is yet to decide whether it should
enhance its interest rates as demanded by the IMF, the State Bank has
indicated that it would contain liquidity in the money market. Whereas
it is to be seen if it leads to a tighter monetary policy, containing
liquidity in the money market would shore up the rupee that has been
on the fall for past few days.
The SBP on Thursday kept the yield on treasury
bills in one- week and eight-week repos higher than the previous
cut-off on two-week and six-week repos.
The SBP said it sucked in Rs15.5bn from inter-bank
market in one-week and eight-week repos of treasury bills at 9.5 and
10.25pc at its open market operation, respectively. On February 1, SBP
mopped up Rs12.35bn through two-week and six-week repos at 9 and
Bankers said outflow of Rs15.5bn from the
inter-bank market pushed up lending rates adding that overnight call
rate rose to 11.5pc from only two per cent on Wednesday. They said
some banks also had to borrow overnight funds worth more than Rs2.2bn
from SBP at its fixed repo rate of 13pc. They said a tight money
market would shore up the rupee that has been on the fall for past few
days due to buying of dollars by corporates and those going to Saudi
Arabia for Hajj.
The rupee closed 10 paisa down overnight at
59.42/59.44 to a dollar in inter-bank market.
Bankers said the Thursday cut-off was a clear
indication that the SBP had started further tightening of monetary
policy on the demand of the IMF. But two senior central bankers said
higher cut-off on T bills repos meant that the SBP would no longer
keep the money market excessively liquid. They said they would not be
surprised if the market interpreted this as a prelude to a tighter
Inflation inflicts 10pc forex losses
Pakistan has lost around 10 per cent foreign
exchange earnings from its exports due to inflation during the first
seven months of the financial year 2000-01, according to an analysis
of the official foreign trade statistics.
The statistics showed 9.57 per cent rise in exports
in terms of dollars as against an increase of 19.56 per cent in terms
of Pak rupee, compared to the corresponding period previous year. In
absolute terms, the shortfall comes to more than $521 million.
In many cases, the drop in exchange value of the
rupee under conditionalities of the Bretton Woods institutions
cancelled the benefits that might have accrued from the increase in
the volume of exports.
The loss due to devaluation was further compounded
by the fact that most of the major items were exported at reduced unit
value, thus sharply reducing the impact of increase in volume. Thus
although the quantity of cotton yarn exported during the period under
report exceeded those of July-January 1999-2000, the accrual in terms
of dollars was only 2.60 per cent higher.
Increase in interest rate not possible, IMF told
The visiting five member IMF review mission headed
by Ms Sena Eken has asked the nationalized commercial banks (NCBs) to
increase rate of interest with a view to improving their financial
"But we have told the mission members that
there is hardly any space and potential available to increase the
banks' interest rate", said the President of Habib Bank Limited (HBL),
He told reporters at a briefing on Tuesday that the
IMF mission had met bankers and financial experts in Karachi on Monday
where the issue of increasing banks' interest rate was discussed.
Oil prices may come down
The Federal Secretary for Petroleum and Natural
Resources, Abdullah Yusuf, has expressed the hope that oil prices will
come down next month in view of the declining prices of the commodity
in the international market.
Addressing a press conference on Thursday, he said
oil prices in international market were lower in December and January
but went up in February because of production cut by OPEC.
Pakistan State Oil (PSO) has earned a after tax
profit of Rs 1.35bn on sales revenue of Rs 82bn during July-Dec 2,000
as compared to the same period of 1999.
Pakistan offers loan to Lanka
Pakistan has offered to lend Sri Lanka 20 million
dollars to buy arms to battle a minority Tamil separatist rebellion,
military officials said on Tuesday.
"We have been offered a 20 million dollar line
of credit for military requirements," military spokesman
Brigadier Sanath Karunaratne said. He said the offer was made during a
visit to Sri Lanka last month by a senior official of the Pakistan
Record credit given to private sector
A high level meeting presided over by Chief
Executive General Pervez Musharraf was told on Tuesday that the
nationalised commercial banks have extended a record Rs 90 billion in
credit to the private sector during the first seven months of
However, the chief executive asked the presidents
of National Bank of Pakistan (NBP), Habib Bank Ltd (HBL) and United
Bank Ltd (UBL) who were also present in the meeting, to drastically
improve their financial health so that they could be privatized as
early as possible.
Askari Commercial Bank Limited announced an
increase of 12 per cent in after tax profit to Rs315.6 million for the
year ended December 31, 2000, from Rs282.4 million the previous year.
Pakistan State Oil cuts LPG price
Pakistan State Oil (PSO) has reduced the prices of
liquefied petroleum gas (LPG) by 20 per cent. Domestic LPG cylinder
will now cost Rs185 (exclusive of distributors' commission) as
compared to Rs233 , said a PSO spokesman.
Saudi Pak to provide Rs397m financing
The board of directors of Saudi Pak Industrial and
Agricultural Investment Company approved a total financing of Rs397m
to 11 companies.
The financing comprises Rs262m for six companies in
manufacturing sector, Rs80m for three companies in financial sector
and Rs35m for two companies in fisheries and services.