Pakistani rupee strengthens 5.4% on reports of China loan

It was the first significant strengthening in years for the Pakistani rupee, which has weakened more than 20 percent since December after four separate devaluations by the central bank. (AFP)
Updated 30 July 2018
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Pakistani rupee strengthens 5.4% on reports of China loan

  • State Bank of Pakistan declines comments on reports
  • Rupee’s surge unlikely to be sustained — brokerage

KARACHI: The Pakistani rupee surged by 5.4 percent to 120.84/122.45 per dollar on Monday, following domestic media reports over the weekend that China had agreed to provide $2 billion in loans.
A State Bank of Pakistan spokesman declined to comment on Monday about the media reports, which could not be confirmed.
Monday brought the first significant strengthening in years for the rupee, which had weakened more than 20 percent since December after four separate devaluations by the central bank.
Karachi-based brokerage Intermarket Securities said weekend publication of full results of the July 25 election may have helped sentiment, as did media reports of possible inflows from Saudi Arabia.
Officials from Imran Khan’s Pakistan Tehreek-e-Insaf (PTI), or Pakistan Movement for Justice, party said they were in talks with independents and at least one other political party to form a coalition government.
But the rupee’s advance might be short-lived, given Pakistan’s economic problems, analysts said.
“Short-term flows aside, it is difficult to see the (rupee) sustaining its pullback for long,” Intermarket Securities said in a note.
Many analysts expect Pakistan to turn to the International Monetary Fund for a bailout, which is expected to be in excess of $10 billion, according to local media reports.
Fawad Khan, head of research at BMA Capital, said the rupee surge could also be due to steps by the interim government to curb imports and new rules on documentation for buying more than $500.
He agreed the election results added to optimism on lending and imports.
“The market needs political stability, and that’s what it sees right now,” Khan said.
He added that the central bank so far had not acted to discourage the rupee’s rise, “but it might step in by tomorrow by start buying dollars from open market.”
The State Bank of Pakistan is the most influential player in the thinly-traded local foreign exchange market and controls what is widely considered a managed float system. 


Jubail petrochemical complex could lead to homegrown car industry

Updated 27 June 2019
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Jubail petrochemical complex could lead to homegrown car industry

  • Advanced Petrochemical said it signed a memorandum of understanding with SK Gas to build a propane dehydrogenation and polypropylene complex
  • The project is expected to produce high value plastics grades for the automotive industry as well as other specialized grades that are currently being imported into Saudi Arabia

LONDON: Advanced Petrochemical and South Korean SK Gas plan to develop a $1.8bn petrochemical complex in Jubail that could help plans to develop a homegrown car industry in Saudi Arabia.
It comes amid increased economic cooperation between Riyadh and Seoul following an $8.3 billion economic co-operation pact struck this week during the first visit of Saudi Crown Prince Mohammed bin Salman to South Korea.
The Saudi petchem producer said it signed a memorandum of understanding with SK Gas to build a propane dehydrogenation and polypropylene complex. The project is expected to produce “high value plastics grades for the automotive industry” as well as other specialized grades that are currently being imported into Saudi Arabia, Advanced Petrochemical said in a filing to the Tadawul stock exchange on Wednesday.

 

Separately the company said it has received propane feedstock allocation from the Kingdom’s Ministry of Energy, Industry and Mineral Resources for the project, which is slated to start in 2024.
Advanced Petrochemical also disclosed in a third filing that it was conducting a feasibility study for a cracker project in the Kingdom.
These latest deals reflect twin objectives to develop high-value manufacturing in the Kingdom to create jobs while also investing heavily in the petrochemicals sector to capitalize on rising global demand for high value plastics.
Saudi Arabia is the largest new automotive sales and auto parts market in the Middle East, accounting for an estimated 40 percent of all vehicles sold in the region, according to the US export.gov website.The addition of potentially as many as 3 million women drivers to the roads is expected to further spur domestic demand.
Saudi companies, spearheaded by Saudi Aramco, are investing billions of dollars in petrochemical projects worldwide to meet rising global demand. Petrochemicals are set to account for more than a third of the growth in world oil demand to 2030, and nearly half the growth to 2050, adding nearly 7 million barrels of oil a day by then, according to the International Energy Agency (IEA).
Demand for plastics — the key driver for the petchem industry — has outpaced all other bulk materials (such as steel, aluminum, or cement), nearly doubling since 2000, the IEA estimates.

FACTOID

40% - Saudi Arabia is the largest new automotive sales and auto parts market in the Middle East, accounting for an estimated 40 percent of all vehicles sold in the region.