KARACHI: Pakistan has devalued its national currency, the Pakistani Rupee (PKR), for the fifth time since December 2017, as the country faces mounting pressure over external payments amid diminishing foreign-exchange reserves.
“Today, the exchange rate in the interbank market closed at PKR 133.64 to the US dollar, against the previous day’s closing of PKR 124.27 to the US dollar,” the State Bank of Pakistan said on October 9. “This movement broadly reflects the current-account dynamics and also the demand-supply gap in the foreign-exchange market.
“Although the current-account deficit narrowed in August 2018, a consistent increase in the oil-import bill, on account of rising international oil prices, has exerted pressure in the foreign-exchange market.”
Pakistan has, after much delay, finally decided to approach the International Monetary Fund for help, but the rupee is expected to remain under further pressure this week, with currency experts predicting that a sixth round of devaluation is inevitable as a prerequisite for IMF assistance.
“The rupee was overvalued as compared with dollar and the correction was overdue,” said Zeeshan Afzal, executive director of research at Insight Securities. “It is no coincidence that the rupee devaluation has come at a time when Pakistan has formally announced an approach to the IMF for a bailout package.”
Pakistani Finance Minister Asad Umar on Monday announced the country will approach the IMF for assistance, after foreign-exchange reserves declined to $8.4 billion by September 28.
Information Minister Fawad Chaudhry on Tuesday said turning to the IMF was a “difficult decision.”
He told guests at an event in Islamabad: “The country’s remaining reserves can only serve for one month and 16 days, while the country needs $8 billion for debt servicing. We need $28 billion to run the country for this year.”
However, experts believe that the country’s growth will slow after an IMF intervention.
“The IMF program will come with specific external, fiscal and monetary measures that are likely to slow gross domestic product growth to about 4 to 4.5 percent,” said Saad Hashmey, an analyst at Topline Securities.
The Pakistan stock market reacted strongly to the government’s decision to opt for an IMF program for stabilization and economic recovery, with the benchmark KSE 100 index recovering 606 points.
“Oil and banking stocks outperformed on surging global oil prices and higher banking spreads,” said Ahsan Mehanti, chief executive of Arif Habib Group. “The auto, steel and cement sectors underperformed on a weak earnings outlook, record rupee depreciation and the likely curtailment of China-Pakistan Economic Corridor projects. Late-session buying on likely economic stability post-IMF bailout played a catalyst role in a bullish close.”
This is the fifth round of rupee devaluations since December last year. The government has devalued the currency from PKR 105 against the dollar on December 8, 2017, to PKR 135 on October 09, 2018, making it 27 percent weaker.
“We expect that the currency will further depreciate by up to 5 percent before the country goes to the IMF program,” Afzal said.
Fahad Irfan, head of research at Alfalah Securities, said: “We see the rupee further depreciating to PKR 140 against (the dollar) because the pace of depletion of foreign-exchange reserves is accelerating.”
that the rupee was not adjusted with a basket of other currencies when peer countries took corrective measures, which is why it remains under pressure.
As the devaluation is expected to increase inflationary pressure, analysts expect the State Bank of Pakistan will increase its interest rate from the current 8.5 percent in the next monetary policy announcement.
Junaid Esmail Makda, president of the Karachi Chamber of Commerce and Industry, expressed deep concerns about the serious devaluation of rupee against dollar, saying it will have a devastating effect on all segments of society, particularly middle- and lower-income groups, with the poor likely to particularly suffer as a result of rising inflation.
The central banks said it will continue to closely monitor foreign-exchange markets and stands ready to ensure stability in the financial markets and curb the emergence of speculative pressures.
Pak Rupee plunges to all time low at 133.6 against Dollar ahead of IMF bailout plan
Pak Rupee plunges to all time low at 133.6 against Dollar ahead of IMF bailout plan
- Pak Rupee is still overvalued, might undergo another 5 percent devaluation to PKR 140, say financial experts
- Pakistan needs $8 billion to service its debts and $28 billion to run its financial affairs for the current year
Bitcoin approaches $100,000 on optimism over Trump crypto plans
- Bitcoin has doubled this year, up 40 percent since US election
- Trump, pro-crypto Congress seen clearing regulatory clouds
SINGAPORE/LONDON/NEW YORK: Bitcoin came within a whisker of closing above $100,000 for the first time on Thursday as the election of Republican Donald Trump as US president spurred expectations that his administration will create a friendly regulatory environment for cryptocurrencies.
The world’s largest cryptocurrency was trading between $98,000 and $99,000 in late afternoon trading in the US on Thursday, after briefly touching $99,073. Bitcoin has more than doubled in value this year and is up about 40 percent in the two weeks since Trump was voted in as the next US president and a slew of pro-crypto lawmakers were elected to Congress.
Trump embraced digital assets during his campaign, promising to make the United States the “crypto capital of the planet” and to accumulate a national stockpile of bitcoin.
Crypto investors see an end to increased scrutiny under US Securities and Exchange Commission Chair Gary Gensler, whom Trump has said he will replace.
Trump also unveiled a new crypto business, World Liberty Financial, in September. Although details about the business have been scarce, investors have taken his personal interest in the sector as a bullish signal.
Billionaire Elon Musk, a major Trump ally, is also a proponent of cryptocurrencies.
Over 16 years after its creation, bitcoin appears on the cusp of mainstream acceptance.
“Everyone who’s bought bitcoin at any point in history is currently in profit,” Alicia Kao, managing director of crypto exchange KuCoin, said.
“But those who bought it early, when there were significant obstacles to doing so and there was the might of the world’s financial and governmental forces intent on crushing it, are the real winners. Not because they’re rich, but because they’re right.”
Bitcoin’s rebound from a slide below $16,000 in late 2022 has been rapid, boosted by the approval of US-listed bitcoin exchange-traded funds in January this year.
The Securities and Exchange Commission had long attempted to block ETFs from investing in bitcoin, citing investor protection concerns, but the products have allowed more investors, including institutional investors, to gain exposure to bitcoin.
Crypto rush
More than $4 billion has streamed into US-listed bitcoin exchange-traded funds since the election. This week, there was a strong debut for options on BlackRock’s ETF, with call options — bets on the price going up — more popular than puts.
“There is a persistent bid in the market,” said Joe McCann, CEO and founder of Asymmetric, a digital assets hedge fund in Miami. “$100,000 is a foregone conclusion.”
Crypto-related stocks have soared along with the bitcoin price and shares in bitcoin miner MARA Holdings were up nearly 2.3 percent on Thursday.
“Once you break out to new highs, you attract a lot of new capital,” John LaForge, head of real asset strategy at Wells Fargo Investment Institute, said.
“It’s like gold in the 1970s, where this new high is in a price discovery mode. You don’t know how high it’s going to go,” he said.
Yet the rise is not without critics.
Two years ago, the industry was wracked by scandal with the collapse of the FTX crypto exchange and the jailing of its founder Sam Bankman-Fried.
The cryptocurrency industry also has been criticized for its energy usage, with miners under scrutiny over their potential impact on power grids and greenhouse gas emissions due to their energy-intensive operations.
Crypto crime also remains a concern, with an analysis by crypto researchers Chainalysis finding that at least $24.2 billion worth of crypto was sent to illicit wallet addresses last year, including addresses identified as sanctioned or linked to terrorist financing and scams.
Saudi Arabia’s GACA ushers in new era of passenger experience with AI
JEDDAH: Saudi Arabia’s aviation authority is revolutionizing the passenger experience by incorporating artificial intelligence into its services, in alignment with the nation’s strategic aviation plan, a senior Saudi official said.
At the 2024 Global Civil Aviation Forum in Shanghai, Abdulaziz bin Abdullah Al-Dahmash, vice president of the General Authority of Civil Aviation for Quality and Passenger Experience, highlighted the authority’s ongoing initiatives designed to improve passenger satisfaction.
A session dedicated to GACA’s role in enhancing the passenger experience featured international experts and focused on the authority's efforts to align with Saudi Arabia's aviation strategy and Vision 2030.
The discussion underscored Saudi Arabia's use of data analytics and AI to transform the aviation sector, supporting the National Aviation Strategy and the broader Vision 2030 objectives. This approach is part of the Kingdom's goal to achieve excellence in both aviation services and infrastructure.
The National Aviation Strategy serves as a roadmap to solidify Saudi Arabia’s position as a global leader in tourism, business travel, and logistics. Built around three core pillars — empowering national tourism, improving domestic aviation, and aligning with Vision 2030 — the strategy aims to enhance interconnectivity, increase the market share of national carriers, and expand airport infrastructure.
By leveraging its strategic location and investment potential, Saudi Arabia’s aviation strategy directly contributes to Vision 2030, which aims to strengthen services and bolster the travel and logistics sectors.
Al-Dahmash noted that to achieve the National Aviation Strategy’s ambitious goals, which include tripling passenger traffic to 330 million annually by 2030, Saudi Arabia is prioritizing major infrastructure projects.
This includes constructing new airports, such as the King Salman International Airport, and expanding existing ones to accommodate the surge in passenger numbers. Alongside this, there is a strong focus on improving operational efficiency and enhancing the overall passenger experience.
In this context, GACA is actively developing and implementing programs to meet evolving passenger expectations. One such innovation is the introduction of AI-powered systems that manage and monitor passenger flow, tracking wait times across Saudi airports.
Additionally, the “Bagless Traveler” initiative is transforming the travel process by enabling passengers to complete check-in and baggage handling from their accommodation. During its pilot phase, the service successfully assisted over one million passengers, with more than 2 million bags processed without incident.
Al-Dahmash also emphasized the importance of regulatory frameworks that GACA has implemented, noting that these efforts have significantly improved services at Saudi airports, leading to higher levels of passenger satisfaction. This success has garnered recognition, with several airports receiving local and international awards.
Moreover, GACA has presented its innovative passenger experience programs at global conferences, sharing its best practices with civil aviation authorities worldwide, demonstrating how others can leverage these advancements for similar success.
Closing Bell: Saudi main index slips to close at 11,840
- Parallel market Nomu gained 681.17 points, or 2.28%, to close at 30,540.28
- MSCI Tadawul Index lost 4.52 points, or 0.30%, to close at 1,486.82
RIYADH: Saudi Arabia’s Tadawul All Share Index slipped on Thursday, losing 27.40 points, or 0.23 percent, to close at 11,840.52.
The total trading turnover of the benchmark index was SR5.39 billion ($1.43 billion), as 98 of the stocks advanced and 131 retreated.
The Kingdom’s parallel market Nomu gained 681.17 points, or 2.28 percent, to close at 30,540.28. This comes as 63 of the listed stocks advanced, while 23 retreated.
The MSCI Tadawul Index lost 4.52 points, or 0.30 percent, to close at 1,486.82.
The best-performing stock of the day was Al-Baha Investment and Development Co., whose share price surged 10 percent to SR0.33.
Other strong performers included Saudi Reinsurance Co., with a 7.05 percent increase in its share price to SR43.30, and Saudi Chemical Co., which saw its share price rise 5.46 percent to SR10.24.
Saudi Cable Co. recorded the largest decline, with its share price dropping 4.02 percent to SR97.90.
CHUBB Arabia Cooperative Insurance Co. also saw its stock fall 3.13 percent to SR49.50.
Naseej International Trading Co. experienced a 2.64 percent drop in its share price, which fell to SR92.30.
On the announcements front, Saudi Awwal Bank has disclosed its intention to issue an SR-denominated Additional Tier 1 Sukuk through a private placement in the Kingdom, as part of its SR20 billion Additional Tier 1 Sukuk issuance program.
According to a Tadawul statement, the bank has appointed HSBC Saudi Arabia as the sole lead manager for the proposed offer. The statement said the purpose of the issuance is to strengthen the bank’s capital base and support the achievement of its long-term strategic objectives.
The amount and terms of the sukuk will be determined at a later stage, based on market conditions at that time.
Saudi Awwal Bank closed the session at SR31.40, down 0.63 percent.
The Saudi Investment Bank has announced the completion of its US dollar-denominated Additional Tier 1 capital sustainable sukuk offering under its Additional Tier 1 capital sukuk program.
A bourse filing revealed that the offer is valued at $750 million, comprising 3,750 sukuk with a par value of $200,000 each and a return of 6.275 percent.
The sukuk have a perpetual maturity, callable after five years. Settlement of the sukuk issuance is scheduled for Nov. 27, and the sukuk will be listed on the London Stock Exchange’s International Securities Market.
Saudi Investment Bank closed the session at SR13.88, down 0.29 percent.
Aramco to increase borrowing, focus on dividend growth, CFO says
RIYADH: Saudi Aramco plans to increase borrowing and focus on enhancing its dividend distribution strategy, revealed the company’s chief financial officer.
In an interview with Bloomberg, Ziad Al-Murshed explained that this move is part of the company’s efforts to optimize its capital structure.
Aramco is considered one of the pillars of the Saudi economy, encompassing the entire oil production chain, from hydrocarbon extraction to energy generation, as well as refining and commercial distribution activities.
“You’ll see us do a couple of things. One is, just take on more debt compared to use of equity,” Al-Murshed said during the interview.
“It’s nothing to do with the dividend, it is optimizing our capital structure so that we end up with a lower weighted average cost of capital,” he added.
Aramco returned to the debt market earlier this year after a three-year hiatus, raising $9 billion in two separate issuances. In June, it launched a $6 billion offering of dollar-denominated bonds, followed by a $3 billion issuance of Islamic bonds in September.
The CFO noted: “We had the luxury of sitting out those three years until the market became conducive.”
Al-Murshed provided insight into how the company increased its dividend by 4 percent in each of the past two years and is now paying over $81 billion in base dividends.
“We’re looking for it to be progressive over the years,” he said, adding that the company’s free cash flow supports this strategy.
While the company plans to issue debt regularly, Al-Murshed emphasized that it will not be overly frequent and revealed that Aramco has no plans to sell more debt for the remainder of 2024.
“We want to be active, but we don’t want to be too active,” he said.
The CFO further clarified that the company’s decision to sell debt is primarily aimed at broadening its investor base.
Al-Murshed did not specify whether Aramco would borrow to support its dividend payments, which are set to total $124 billion this year, exceeding the company’s earnings.
Earlier this month, Aramco reported a net profit of SR103.37 billion ($27.52 billion) for the third quarter of 2024, exceeding analyst expectations, which had projected a median net income of $26.9 billion.
However, in a statement released at the time, the company noted a 15.4 percent decline in net profit compared to the same period in 2023, attributed to challenging market conditions, including lower prices for crude oil, refined products, and chemicals.
Aramco’s vision remains to be the world’s leading integrated energy and chemicals company, operating in a safe, sustainable, and reliable manner.
Saudi Arabia's Ma’aden proceeds with $10bn capital raise to boost phosphate stake
- Ma’aden said its shareholders will convene virtually on Dec. 11 to approve the capital increase
- Plan includes issuing 111 million new ordinary shares valued at SR10 each
RIYADH: Saudi Arabian Mining Co., or Ma’aden, has issued a shareholder circular outlining the terms of its plan to raise its share capital to SR38.03 billion ($10.1 billion) from SR36.92 billion to boost its phosphate business.
The move follows an earlier announcement to acquire a 25 percent stake in Ma’aden Wa’ad Al-Shamal Phosphate Co. from Mosaic Phosphates B.V., increasing its ownership in the joint venture to 85 percent.
In April, Ma’aden announced the signing of an agreement to acquire 210.93 million shares owned by Mosaic Co. and its subsidiary, Mosaic Phosphates B.V. Regulatory approval for the transaction was granted in November by the Capital Market Authority.
In a bourse filing, Ma’aden said its shareholders will convene virtually on Dec. 11 to approve the capital increase. The plan includes issuing 111 million new ordinary shares valued at SR10 each, representing a 3.01 percent rise in the company’s share capital.
In exchange, Mosaic Phosphates will transfer its MWSPC stake to Ma’aden, aligning with the Saudi firm’s strategic expansion in the phosphate sector.
MWSPC, established in 2014 and based in Turaif, is a joint venture between Ma’aden, Mosaic Co., and Saudi Basic Industries Corp. Following the transaction, SABIC will retain its 15 percent stake while Ma’aden strengthens its position as a global phosphate leader.
Mosaic Netherlands Holding Co., a subsidiary of Mosaic Co., will receive the newly issued shares, which will be subject to a three-year lock-up period. Limited transfers will begin in the fourth year, with full tradability by the fifth year, the circular said.
The acquisition will enhance Ma’aden’s control over MWSPC, recognized as a low-cost, large-scale phosphate producer. It will also grant Ma’aden access to Mosaic’s marketing rights, a component of the deal’s valuation at SR5.62 billion.
Ma’aden expects increased earnings per share following the transaction, reflecting anticipated synergies and enhanced operational efficiencies, according to the document.
The company assured shareholders that all regulatory approvals for the transaction have been secured, with a detailed timeline for procedural steps provided in the circular.
The move underscores Ma’aden’s commitment to driving value creation in the Kingdom’s mining sector, aligning with Saudi Vision 2030 goals to diversify the economy and develop industrial capabilities.
In the first half of this year, Ma’aden achieved a net profit of SR2 billion, marking a 160 percent increase compared to the same period in 2023.
The surge in profitability was driven by several key factors. A major contributor to this financial success was the significant boost in sales volume, according to a Tadawul statement.
The company’s robust performance in primary aluminum and gold sales played a crucial role in driving up revenues. Ma’aden also benefited from reductions in raw material costs and lower depreciation expenses, which further enhanced its profitability.
Ma’aden’s performance and strategic advancements underscore its commitment to leading the mining sector and contributing to Saudi Arabia’s economic diversification goals, particularly in developing mining as a critical pillar of the Kingdom’s industry.
