By Atif Khan
Islamabad: As Pakistani families are struggling hard to survive as inflation and gas prices continue to soar, the markets showed a mild recovery during the month of October.
It has been a month since Ishaq Dar has been in office. Presented as Czar, Dar vowed to bring the rupee down to Rs 180 against the dollar by the end of October. Due to his efforts, the Pakistani currency regained 5.86% (or Rs14.07) during October's first week, but it proved to be small and temporary success.
From a value of Rs 237 on September 26, he brought down the exchange rate to Rs. 220.89 on October 31. However, bringing the dollar down below Rs. 180 is still a dream. On Tuesday, the Pakistan Stock Exchange (PSX) KSE-100 index jumped 1.32%, while the rupee appreciated 0.11% in the inter-bank. The rupee settled at Rs 220.65 against $US in interbank, showing a slight increase from yesterday's 220.89. The Pakistani currency's mild recovery comes following the finance minister’s meetings with key stakeholders. Ishaq Dar, on Saturday, warned the heads of commercial banks and representatives of exchange companies of stern action against the hoarders and currency smugglers, who, according to him, are manipulating to keep the rupee undervalued.
The stock market remained dull overall during the month. The recent recovery has been attributed to Prime Minister Shahbaz Sharif's visit to China. The PM is on a two-day visit to China, where he will hold meetings on the revitalization of CPEC (China-Pakistan Economic Corridor) and seek debt relief through the rolling over of bilateral debt. The government's decision to keep fuel prices unchanged has already contributed to creating a positive sentiment in the market. However, it is too early to say whether the market will carry this optimism or not, for long.
The political scenario is getting more uncertain and inflation seems beyond the control of the coalition government. Hundreds of thousands of Pakistani families are struggling to get food for their kids and pay their bills, as living costs are surging to unprecedented levels. According to the Pakistan Bureau of Statistics, food prices increased by 26.6% year on year in October, with rural areas experiencing a 29% increase.
The real estate sector, which drives over 50 allied small industries, has been dormant due to increasing costs of building materials and overall uncertainty. The under-construction units are hard to sell due to increasing prices, inflation, and ongoing political uncertainty. In the real estate sector, a crisis is in the making. Those who secured bank loans for housing may not be able to pay their installments, and the builders may not be able to complete their units at promised costs and time.
The state bank data shows banks approved applications amounting to Rs180 billion and disbursed Rs66 billion in housing loans during last year. The crisis is expected to get worse in coming days as former Prime Minister Imran Khan is advancing towards Islamabad with his thousands of die-hard followers.
Read More: Banks approve Rs. 180bn in low-cost housing loans
However, the Ministry of Finance, in its October Outlook, contrary to ground factors, forecast an optimistic picture of the economic performance in the coming months.
"CPI inflation is declining, the rupee has gained stability, and the current account balance is on an improving trend. These developments indicate that economic activity will remain positive and persistent in coming months", the report read.
Read Full Report Here : Monthly Economic Update & Outlook September, 2022
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