Pak­istan com­mod­ity prices jump 25%

Gulf Times Business - - BUSINESS -

Pak­istan ru­pee de­val­u­a­tion of 7.8% with gas tar­iff hike will in­crease com­mod­ity prices by 15% to 25%, push­ing in­fla­tion to dou­ble dig­its in the months ahead, an­a­lysts and traders said.

US dollar on Tues­day closed at Rs133.64 in the in­ter­bank mar­ket against pre­vi­ous day’s clos­ing of Rs124.27. It had an im­pact of around 3.5% on gold prices in the lo­cal mar­ket in one day.

One tola gold closed at Rs62,190, up 3.5% against Rs60,060 on Mon­day. “We had trad­ing of only 15% to 20%, while 80% buy­ers re­mained away,” said Muham­mad Shafi Khan, a se­nior gold­smith.

Arif Habib Com­modi­ties CEO and manag­ing di­rec­tor Ah­san Me­hanti said that af­ter the govern­ment au­thor­i­ties dis­closed they would seek the In­ter­na­tional Mon­e­tary Fund for a bailout, the cap­i­tal mar­ket saw a rally.

How­ever, IMF would not be giv­ing the bailout in cash, he said, it would be con­di­tional. “Pak­istan will have to cur­tail CPEC (Chi­naPak­istan Eco­nomic Cor­ri­dor) ex­pen­di­tures,” he said.

Saudi Ara­bia has also re­fused to resched­ule the oil pay­ments.

In­fla­tion would likely reach dou­ble dig­its, while gas and oil prices would in­crease by 15%.

In­ter­est rate might fur­ther rise by 2.5% to 4%, he said.

Ru­pee was likely to face fur­ther de­val­u­a­tion of around 7% to Rs145. De­pre­ci­a­tion im­pact has was yet to show on the mar­ket. “There is fear. In­ter­est rate in­crease will be neg­a­tive for the mar­ket,” Me­hanti added. Warn­ing that se­vere chal­lenges lay ahead for the govern­ment the CEO said, “They will have to work hard to make some im­prove­ments in the eco­nomic out­look.”

All Sindh Sarafa As­so­ci­a­tion Pres­i­dent Al-Haj Ha­roon Chand said the mar­ket was down af­ter cur­rency de­pre­ci­a­tion. “Due to dollar ap­pre­ci­a­tion, pur­chas- ing power par­ity has fur­ther in­creased. Dollar will fur­ther go up. Gold will also go up, it de­pends on dollar,” he said.

Re­tail Gro­cers As­so­ci­a­tion sec­re­tary Gen­eral Farid Qureshi said the trans­porters had al­ready in­creased the rates up to 25% af­ter an in­crease in the CNG price.

“Ru­pee de­pre­ci­a­tion and an in­crease in the prices of CNG and petrol will in­di­rectly have im­pact of around 25% rise in con­sumer goods,” he said. “Cus­tomers are stuck un­der huge in­fla­tion from all sides.”

Qureshi said that in the past, in­fla­tion has never in­creased at that high a rate. “Bis­cuits, bread and other food item prices will soon in­crease,” he cau­tioned.

Gold­smith Muham­mad Shafi Khan said, “When dollar rate re­mained at Rs105, gold prices in our mar­ket were lower by Rs1,500 to Rs2,000 against in­ter­na­tional mar­ket, be­cause old gold was in cir­cu­la­tion.”

With the cur­rency de­pre­ci­a­tion, prices would go up against in­ter­na­tional prices. “Gold price will in­crease by one to two per cent than ru­pee de­pre­ci­a­tion.

A veg­etable seller sprin­kles wa­ter to keep them fresh and shine at a makeshift stall along a mar­ket in Karachi. Pak­istan ru­pee de­val­u­a­tion of 7.8% with gas tar­iff hike will in­crease com­mod­ity prices by 15% to 25%, push­ing in­fla­tion to dou­ble dig­its in the months ahead, an­a­lysts said.

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