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Pakistan inflation rises to 48-year-high of 27.55%: Report



Pakistan’s inflation quickened to the fastest in almost 48 years in January as thousands of containers of food items, raw materials and equipment are stuck in ports after the cash-strapped government curtailed imports.

Read more: Pakistan mosque blast that killed 100 was revenge against police, says top cop

Consumer prices rose 27.55% from a year earlier, according to data released by the statistics department on Wednesday. That compares with a median estimate for a 25.9% gain in a Bloomberg survey and a 24.47% jump in December. Inflation is at the highest since May 1975, according to central bank data.

The latest reading comes a week after the State Bank of Pakistan increased its benchmark rate to the highest in more than 24 years to help stabilize an economy that’s spiraling deeper into crisis amid supply shortages, sky-high prices and funding crunch. Pakistan’s troubles worsened after last year’s devastating floods that amplified the impact of political turmoil and the fallout from the war in Ukraine.

What Bloomberg Economics Says…

It will likely continue to accelerate as the government scrambles to fulfill the International Monetary Fund’s aid conditions to secure much-needed dollars. We see inflation climbing in coming months on a combination of rupee depreciation and hikes in fuel prices and electricity tariffs. The government could raise additional taxes on the IMF’s insistence. This will likely push the State Bank of Pakistan to increase interest rates further, says Ankur Shukla, India economist.

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About 6,000 containers are stranded in ports, including thousands of tons of poultry feed ingredients that pushed chicken prices to a record earlier this year. The logjam is aggravating inflation that has lingered above 20% since June as the government limited imports amid scare funds.

The latest inflation print is higher than the central bank’s November forecast of 21%-23% for the year ending June, which was already revised higher from a projection made in October.

Foreign-currency reserves have dwindled to a nine-year low of $3.68 billion, equivalent to less than a month of imports while local banks have been refusing to issue letters of credit, leading to a standstill that puts businesses at risk of shutting down.

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The local currency plunged to a record low recently after money exchangers abolished the limit on the dollar-rupee rate in the open market to curb the black market. A more market-determined currency may help Pakistan secure more money from the International Monetary Fund, whose loan disbursement to the nation has seen multiple delays.

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Rupee finds temporary ease as India’s current account deficit shrinks



Economists are lowering their forecasts for India’s current-account shortfall, thanks to favorable trade trends that are proving to be a blessing for the rupee — among the worst performers in emerging Asia this month.

Economists lowering forecasts for India’s current-account shortfall, thanks to favorable trade trends.(Reuters)

Barclays Plc expects the gap in current account — the broadest measure of trade in goods and services — to be 1.8% of gross domestic product in the year starting April 1, after previously cutting it to 1.9% from 2.3% deficit it had estimated in mid-February. Citigroup Inc. slashed its forecast even further to 1.4% of GDP from 2.2%, reflecting a steady drop in goods imports and strength in services exports.

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The lower prints will provide a tailwind to the rupee, which is vulnerable to a selloff, given the twin deficits in the nation’s budget and current account make it more reliant on foreign inflows. A narrowing shortfall will also take the pressure off the central bank to sell foreign exchange from its reserves to stabilize the currency and check imported inflation.

“We are encouraged by the fact that the narrowing of the trade deficit has sustained and services exports remain strong,” said Ashish Agrawal, head of foreign-exchange and emerging-market macro strategy research at Barclays in Singapore. “The lower current account deficit reduces dependence on financing flows and RBI’s dollar sales at the margin.”

That’s an added positive for the rupee, which along with Asian peers gained against the dollar after a dovish interest-rate hike by the Federal Reserve. The rupee was up 0.2% to 82.30 to a dollar on Monday.

Services Surprise

What seems to have caught economists by surprise is the strong services exports print.

Services trade surplus was strong at $14.6 billion in February, building on January’s revised surplus of $13.8 billion. Services exports nearly touched $30 billion in both January and February, an increase of about 40% on-year.

HSBC Holdings Plc attributes a part of this rise to Global Capability Centres set up by large multinational corporations. India is home to about 40% of global GCCs, and this ratio is only expanding as they rise in scope, an HSBC report said.

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“Services trade surplus is truly a hero in India’s foreign trade story right now,” said Dhiraj Nim, an economist and forex strategist at Australia and New Zealand Banking Group, who is confident the trend will continue.

Barclays expects the improving external sector fundamentals and relatively cheap valuations to help the rupee rally later as the dollar weakens. But most remain cautious amid global volatility and the Reserve Bank of India’s aim to build back reserves at every opportunity.

From the current account perspective, this augurs well for the rupee, said Madhavi Arora, lead economist at Emkay Global Financial Services Ltd. That said, the global situation is extremely fluid and could adversely impact global risk appetite for risk EM assets, including the rupee — emerging Asia’s worst performing currency last year and among the bottom this year.

“Thus the capital account side also needs a watch,” she said.

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Gold and silver prices on March 27: Check rates in your city



The prices of gold and silver in India on Monday experienced a slight decline in comparison to the previous day. According to data by Goodreturns, the rate for 22-carat gold per gram was Rs. 5,471, a decrease from Sunday’s Rs. 5,485. Similarly, the prices for 8 and 10 grams of 22-carat gold stood at Rs. 43,768 and Rs. 54,710, respectively, exhibiting a drop of Rs. 112 and Rs. 140.

The price of one gram of 24k gold stood at Rs. 5,969 per gram and that of 22k gold at Rs. 5,471.(Representative image/ Istock)

The rate for 24-carat gold was Rs. 5,969 per gram, with 8 and 10 grams priced at Rs. 47,752 and Rs. 59,690, respectively.

In addition, the price of silver witnessed a marginal decrease with the rate at Rs. 73.30 per gram on Monday, as compared to the previous day’s Rs. 73.40, as per the Goodreturns figures. Eight grams of silver cost Rs. 586.40, and 10 grams were priced at Rs. 733. For a kilogram of silver, the cost was Rs. 73,300 as of Monday.

Gold prices in India are dependent on the markets. The prices are determined by a range of factors including volatile policies, slowing economic growth and the strength of the Rupee against US dollar.

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2-day EPFO board meeting from today: List of issues likely to be taken up



The Central Board of Trustees (CBT) of the Employees Provident Fund Organisation (EPFO) will convene in New Delhi on Monday for a 2-day meet, during which they are expected to discuss a host of issues, including the interest rate for the financial year (FY) 2023-24.

FILE Photo: Employees provident fund organisation head office , EPFO office.

The current meeting of the CBT, its 233rd, will be held under the leadership of Bhupender Yadav, the Union minister for labour and employment.

At present, EPFO has around 6 crore active members, of whom 72.73 lakh were pensioners in FY22, according to Moneycontrol.

Here are some issues that may be discussed during the meeting:

Interest rate: For FY23, the interest rate is likely to be around 8%. The existing rate is 8.1%, which was proposed in March last year for FY22, and approved by the Union finance ministry in June of that year.

The existing rate is the lowest offered by the body in 4 decades.

Higher pension: The board may hold detailed discussions regarding the higher pension option for subscribers after the Supreme Court order. Following the order, EPFO gave employees time till May 3, to opt for higher pension linked to their salaries.

Also Read: All you need to know about EPF higher pension scheme

Minimum pension: The CBT may consider increasing the monthly pension from 1,000 to 3,000, which would be in-line with recommendations made by the parliamentary panel on labour.

Ceiling wage: It is likely to be raised from the current 15,000 per month to 20,000 per month. It was previously revised in 2014, when it was increased from 6,000 a month to 15,000 a month, for companies with at least 20 employees.

Besides these, board members may also discuss steps to improve EPFO’s coverage for its workers, along with increasing investment of incremental deposits in equity instruments, age or risk profile of subscribers notwithstanding.

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