SBP reserves strengthen by $118m
The State Bank of Pakistan (SBP) reported a week-on-week increase of $118 million in its foreign exchange reserves, taking the total to $10.3 billion as of May 2, 2025.
According to the latest data released on Thursday, Pakistan's total liquid foreign reserves stood at $15.5 billion, including $5.2 billion held by commercial banks.
The uptick in SBP reserves signals improved external account stability, offering some relief amid ongoing economic challenges. While the central bank did not specify the source of the increase, such gains are typically attributed to inflows from multilateral institutions, exports, or remittances.
Gold prices in Pakistan declined on Thursday, mirroring a downward trend in the international market. According to the All-Pakistan Gems and Jewellers Sarafa Association (APGJSA), the price of gold fell by Rs4,200 per tola, bringing it down to Rs352,700 in the local market.
Similarly, the rate for 10 grams of gold dropped by Rs3,601, settling at Rs302,383.
This followed a modest gain on Wednesday, when the price per tola had risen by Rs800, reaching Rs356,900.
Internationally, gold prices also slipped on Thursday. The global rate stood at $3,343 per ounce (including a $20 premium), reflecting a $42 decrease for the day, as per APGJSA.
Adnan Agar, Director at Interactive Commodities, commented on the recent decline in gold prices, stating, "As news emerges regarding ongoing China-US trade talks, we are seeing downward pressure on gold. Market sentiment is shifting towards risk-on assets, reducing the appeal of safe havens like gold."
Gold prices inched lower on Thursday, ahead of US President Donald Trump's likely announcement of a trade deal between the United States and Britain.
Spot gold was down 0.1% to $3,362.19 an ounce as of 1318 GMT, after rising 1% earlier in the session. US gold futures slipped 0.7% to $3,368.50.
"The gold market has been very volatile. What you're seeing are short-term investors buying and selling based on news headlines," said Jeffrey Christian, managing partner of CPM Group.
Meanwhile, the Pakistani rupee recorded a slight depreciation against the US dollar for the fifth day in a row, edging down by 0.02% in the interbank market on Thursday.
By the end of the trading day, the rupee settled at 281.52, marking a minor loss of Rs0.05 compared to Wednesday's closing rate of 281.47.
On the global front, the US dollar remained firm against the euro on Thursday, maintaining gains from the previous daythe strongest in two weeksafter the Federal Reserve highlighted growing economic risks from elevated inflation and rising unemployment.
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Express Tribune
41 minutes ago
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Express Tribune
an hour ago
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A premature cut now would be like offering dessert before the main course has even been served. Let's not overfeed an economy still digesting the last policy meal. The YoY inflation dip into the low-to-mid 3% range in recent months has largely been driven by the base effect, not necessarily a fundamental deceleration. With energy tariff adjustments, expected global commodity swings, and reduction in remittance incentives, inflation is likely to re-enter the 7-9% band by year-end. SBP's long-term inflation target band of 5-7% is admirable, but it must also guard real interest rates — ideally 3-5% positive — to sustain current account balance, contain imports, and maintain currency stability. History has shown that dipping below this zone leads to overheating, demand-pull inflation, and pressure on external buffers. We can't afford to repeat that cycle again. Don't light the fuse in year three SBP Governor Jameel Ahmad has repeatedly spoken about avoiding the boom-and-bust mistakes of the past — and he's right. The third year of any macro stabilisation programme is the most vulnerable: the temptation to cut too early is strongest, the political cycle begins to heat up, and the reserves appear deceptively comfortable. But here's the catch — Pakistan's FX reserves, while improved, are still largely propped up by bilateral rollovers, multilateral support, and deferred repayments. This is not the time to fire the bazooka. Instead, it's time to keep a measured hand on the lever, especially as tariff rationalisation under the new National Tariff Policy (NTP 2025-30) continues to lower energy costs for export-oriented industries. Cheaper electricity and gas — if passed on to the right sectors like IT, mining, value-added agriculture, light manufacturing and services — can help Pakistan grow its exports, climb global supply chains, and attract long-term FDI. Let exports earn the right to cut rates. Let Moody's and S&P reward discipline with credit upgrades. Let credit default swap spreads tighten, PIA and ZTBL get privatised, and DISCOs become financially viable. That's when we'll have truly earned macroeconomic space for deeper cuts. Remittance risk: the sleeping volcano Another red flag that must not be ignored is the government's rollback of incentives on incremental remittances — a move that could seriously dent the current account. The Rs200 billion ($700 million) subsidy in previous years catalysed nearly $8 billion in incremental inflows — a 10x multiplier by some measures. Removing this carrot risks not just a slowdown in remittances but also a hit to FX reserves and rupee stability. 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Business Recorder
2 hours ago
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A 100bps cut in policy rate on the cards?
Following a recent visit to the Federal Reserve to inspect a renovation project, the tension between US President Donald Trump and Fed Chairman Jerome Powell was apparent. The future of Powell's position remains uncertain, as both appeared tense during their media presentation. When questioned about the Federal Reserve's renovation exceeding its budget, Trump remarked he would dismiss an employee over it but saw no need to fire the Fed Chairman. Despite a friction between them, the US dollar strengthened, buoyed by the market's confidence following Trump's assurance that Powell would not be let go. Meanwhile, June's durable goods data was disappointing due to weak orders for transportation equipment; it still exceeded expectations, contributing to Dollar's recovery. This weakness primarily stems from tariff pressures rather than other factors. Last week, both existing and new home sales figures fell short of market predictions, placing builders, buyers, and sellers under pressure in a housing market that plays a crucial role in the US economic cycle. Additionally, flash manufacturing PMI readings were weaker than anticipated. The Beige Book indicated that most Federal Reserve districts are experiencing modest growth in lending. Although there were some slight downward revisions, the overall situation remains tense due to persistent inflationary pressures and tariffs. The Federal Reserve's meeting on Tuesday and Wednesday is expected to maintain its current policy stance. It appears that the Fed may be gradually moving toward a rate-cutting cycle. Importantly, the looming August 1 deadline cannot be overlooked. Many of the analysts are predicting that the passing of tariff costs will soon impact consumers due to lag effects, potentially also affecting the labour market. However, there is a possibility for compromise between the US administration and the Federal Reserve. As the tariff situation stabilizes, Powell might hint at a data-driven rate cut in September as a conciliatory measure. As expected last week, the European Central Bank decided to keep its interest rate steady at 2%. With the pause in rate adjustments continuing, the ECB reiterated that its decisions will remain data-driven, making it clear that any future changes in interest rate policy will only be determined during meetings, without early commitments to a particular direction. This week is filled with significant economic reports from around the globe. Key US indicators to monitor include the 2nd quarter GDP, Personal Income and Spending (PCE), Non-Farm Payroll, and Consumer Confidence. In the meantime, the market is gearing up for a crucial week as six Central Banks prepare to announce their interest rate decisions. The State Bank of Pakistan (SBP) will share its policy rate on Wednesday. Except for the SBP, all the other banks are expected to keep their rates unchanged. GOLD @ $ 3337.50— This week, market is expected to see volatility. To move higher, gold must surpass $ 3360 to reach $ 3388 or potentially more. However, if it falls below $ 3302, it could decline to $ 3258 or even $ 3226. EURO @ 1.1742— Euro has strong support at 1.1610 and is expected to remain above this level. If it breaks through 1.1820, it may make a move toward 1.1895. Or else 1.1550. GBP @ 1.3439— Pound Sterling will continue to face pressure unless it surpasses 1.3570 to reach 1.3620. The risk of decline will rise if it breaks below 1.3280. JPY @ 147.67— There may still be some losses, but the USD needs to hold 146.20 to make some recovery. If it can break above 148.90, it will pave the way for testing the 150 levels. If not, watch for a drop to 145.40. SBP meeting today Last week, there was a notable change in the Pakistani foreign exchange market, a rarity in recent times, as the Rupee strengthened against the US Dollar. On Monday, it was around 285 to 1 USD, but by Friday, the SBP closed at 283.4539. It is said that administrative measures helped PKR to gain some strength. The future trend continues to be uncertain. Analyzing the data, it appears that Pakistan's economy is on an upswing. This can be supported by various metrics, for instance, the country's debt and deficit ratios indicate a stronger economic position compared to some emerging and advanced economies. The region's challenges, however, play a significant role. For comparative purposes, consider certain European nations that may hold their credit ratings despite underlying risks. Pakistan's geographical context and lack of diversity similar to weaker European economies further differentiate its situation. Additionally, geopolitical conditions have shifted considerably. After three years of struggles, Pakistan's overall foreign exchange reserves are nearing $ 20 billion, with SBP's FX Reserves at $ 14.46 billion. The current account balance and the payments position are consistently positive, with remittances steadily increasing. The International Reserve and Foreign Currency position (Derivatives) stands at $ 2.6 billion, while the CDS has sharply fallen by over 1200 basis points. Pakistan's international Euro and Dollar bonds are recovering from previous lows, and last week's credit rating improvement by S & P to B- reaffirms the progress in the economy. Nevertheless, the primary challenge lies in sustaining and enhancing these economic gains. This can be achieved by energizing economic activity and boosting liquidity via the banking sector, significantly increasing credit availability to the private sector. However, this alone may not be enough unless the tax-to-GDP ratio needs to be raised significantly. Despite these encouraging signs and with oil prices around $ 70 per barrel, the Pakistani Rupee should not have depreciated and should have remained stable. A stable PKR will assist the administration and monetary authorities in keeping inflation low, enabling the monetary policy committee to potentially lower the policy rate in alignment with inflation trends. Given these considerations, policymakers on Monday July 28, might think about reducing the interest rates by nearly 100 basis points. Copyright Business Recorder, 2025
