Pakistan dollar bonds slump after Dar vows to bring down interest rates
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The country’s sovereign dollar-denominated bonds fell as much as 8 cents to hit fresh record lows after new finance minister Ishaq Dar on Wednesday vowed to bring down interest rates and fight inflation.
Shorter-dated issues suffered the biggest decline with the 2024 bond being bid at 40.2 cents on the dollar, according to Tradeweb data.
Bonds due in 2025 and 2027 fell just over 4 cents while longer-dated maturities received bids at just over 36.6 cents in the dollar.
Inflation in Pakistan is exceeding 27 per cent.
Dar also called the rupee currency undervalued and promised a strong response to resolve the country’s worst economic crisis.
Discussing the future roadmap, the senator said he would try to stabilise the currency before moving on to other targets.
“Our currency does not deserve to be there where it currently is. I believe some speculators who had been playing the game have now stopped. Before I landed here, they had started going in a good direction,” he added. “Our second priority is to bring inflation and interest rates down.”
To another question, the senator said his predecessor Miftah Ismail did everything he could to fix the economy.
“We will build it more and this is a consistent effort,” he added.
Long-term worries about Pakistan’s finances have been compounded over the last month by devastating Monsoon floods.
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Comments (55) Closed
Sep 28, 2022 04:51pm
Looks tough for Dar I don't think his eyesight is correct and he can read what is going on. Real Yes Man is Dar now. His age is too much he hardly understands digital economy.
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Sep 28, 2022 04:52pm
Good work by this govt keep up
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Sep 28, 2022 04:59pm
Prayers for economy to improve assonance possible.
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Sep 28, 2022 05:10pm
Proof is in the pudding. Take rupee up without causing current account deficit
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Sep 28, 2022 05:16pm
He's going to bring down interest rates in Pakistan, while the Federal Reserve in the US, Bank of England and many other developed nations are raising rates due to inflation.
Dar is going to make the same errors, that the new British Chancellor is making with his ''mini budget" and record tax cuts for big business and massive government borrowing, just when the UK economy is in doldrums, with inflation at 40-year high and people struggling to survive day to day.
Dar will bolt when PKR is 300/$
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Sep 28, 2022 05:24pm
Welcoming signs are emerging after Mr. Dar being sown in earlier.
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Sep 28, 2022 05:28pm
As you sow, so shall you reap.
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Sep 28, 2022 05:31pm
Turbulence in the economy will continue no matter who is the Fin minister. Chances of exports increasing are presently minimal as production ha declined.
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Sep 28, 2022 05:36pm
Bring interest rates and inflation down at same time , Dar should be nominated for Economics Nobel prize if he can pull this and must share this secret with other Central banks . This delusional man still thinks everything is same as he left 5 years back , someone should tell him SBP is now autonomous.
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Sep 28, 2022 05:40pm
Guess investors want to dump short-term maturities and buy 10-year ones, considering Ishaq Dawlar wants to bring down the interest rates. The world-wide inflation is driven by supply constraints, which is why it wouldn't last long. A massive correction in the supremely leveraged US markets will be healthy for the rest of the world.
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Sep 28, 2022 05:48pm
"Shorter-dated issues suffered the biggest decline with the 2024 bond being bid at 40.2 cents on the dollar, according to Tradeweb data."
Why not buy back this 2024 Bond at a discount of 59.8 % from the market?
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Sep 28, 2022 05:49pm
Dar is what you would call a glorified accountant who can manipulate the figures to paint a false picture and when things get tough he will be off on another self imposed 5 year medical back problem in London.
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Sep 28, 2022 06:08pm
We all know what happened last time when he was around. After next election he will be on to his next self imposed exile.
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Sep 28, 2022 06:15pm
The country can't afford a cut in interest rates when inflation is at all time high. Is this the plan of this so called economy wizard?
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Sep 28, 2022 06:29pm
Lowering interest rates and keeping the economy overheated goes against conventional economic wisdom. Bond buyers are telling Dar exactly that. He is going to drive the economy and the value of the rupee into the ground. Hopefully SBP will maintain its independence and not allow him to spend precious reserves to prop up the rupee. Markets are telling him what the Rupee is worth but clearly Dar likes whatever he believes in, instead of what the markets are telling him.
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Sep 28, 2022 06:33pm
Next year Dar will leave the country for good and Pakistanis will suffer the worst financial crisis since their independence.
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Sep 28, 2022 06:33pm
The Dar effect - thank you neutrals
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Sep 28, 2022 06:43pm
oh dear, I thought Ishaq Dar was going to perform miracles.
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Sep 28, 2022 06:43pm
Bring down interest rate and fight inflation, someone tell Ishaq Dar, these rae two polar opposites you cannot have both. Low intrest rate cause inflation
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Sep 28, 2022 06:46pm
Let's wait and see
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Sep 28, 2022 06:50pm
The country’s sovereign dollar-denominated bonds fell as much as 8 cents to hit fresh record lows after new finance minister Ishaq Dar on Wednesday vowed to bring down interest rates and fight inflation.
Dar is too incompetent to achieve anything. Have elections and let PTI save the country.
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Sep 28, 2022 06:57pm
As you sow, so shall you reap.
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Sep 28, 2022 07:05pm
Welcome back new FM- Time to face world of reality.
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Sep 28, 2022 07:19pm
Lowering the rate will have negative impact on the value of the rupee. Is that what he wants?
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Sep 28, 2022 07:32pm
As you sow, so shall you reap.
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Sep 28, 2022 07:47pm
What economics is this? Lower rates to lower inflation?
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Sep 28, 2022 07:52pm
Keeping in view the causes that have led to present economic mess, many of which has legacy of wrong policies adopted by the incumbent when he was finance minister before he fled the country, his presented ideas are like paper plates that he is trying to sell as fine china. Either way, there’s typically nothing on them and will remain so till this govt. is shown exit.
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Sep 28, 2022 08:30pm
@Asif, no lower it to buy dollars then sell them later.
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Sep 28, 2022 08:57pm
Dar has no majic to bring down inflation or interest rates, Over rated FM.
His qualification is that he 50 % partner in corruption with Nawaz.
They need more money to live in London.
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Sep 28, 2022 09:13pm
Dollar will bring down Dar soon.
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Sep 28, 2022 09:35pm
Our corrupt leaders priority is to manipulate in such a manner that they can raise more illegal assets overseas.
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Sep 28, 2022 09:37pm
Get ready for Dollar to hit 350.
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Sep 28, 2022 09:39pm
@Asif,
Dar-nomics, myfriend. Only good for sapping up reserves and laundering money of corruption at a good rate
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Sep 28, 2022 09:41pm
Muftah dollar is need of hour.
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Sep 28, 2022 10:07pm
He is a chartered accountant and not a economist, so we shouldn't expect much from him
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Sep 28, 2022 10:55pm
Dar was one of the inventor of Bonds, let him tackle his own inventions.
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Sep 28, 2022 11:39pm
@Asif, It's not economics, it's Pakistanomics. It's supposed to make no sense. Maybe he's watched too many movies where the Captain turns the submarine into the approaching torpedo to deny it the opportunity to get armed in time.
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Sep 28, 2022 11:40pm
He is going to cap dollar at 180. sell it if you bought above this figure.
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Sep 28, 2022 11:41pm
@Asif, will destroy the country further
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Sep 28, 2022 11:48pm
@Khaled, A CA with an additional qualification in how to loot
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Sep 28, 2022 11:52pm
How can this economic hitman talk about this stuff now? SBP has the sole responsibility of fixing the interest rates after the constitutional amendment.
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Sep 29, 2022 12:19am
Intention is to somehow delay the bankruptcy till after the elections. Same Imran was doing by giving subsidies and negating agreement with IMF. By 2024 or end of 2023, Pakistan will default, if not earlier.
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Sep 29, 2022 12:19am
40 cents to a dollar for bond shows, none believe Pakistan can service their loans.
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Sep 29, 2022 12:22am
Another Erdogan strategy, reduced interest rate to fight inflation!
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Sep 29, 2022 01:26am
... Vows to bring down interest rates ???
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Sep 29, 2022 01:27am
@Asif, .... That is the Tipyap Erdogan theory of inflation management.
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Sep 29, 2022 01:46am
Beggars belief
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Sep 29, 2022 03:45am
Holders of Pakistan international bonds are voting with their feet resulting in an unprecedent fall is price of Pakistan International Bonds and Sukuk.
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Sep 29, 2022 03:45am
While government should focus on improving state of the economy but the rates and value of the currency cannot be talked up or down by the Finance Minister. Concrete and consistent steps are required.
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Sep 29, 2022 05:51am
So we can buy the bonds at 40.2 cents and expect to be paid ONE dollar at maturity in 18 months. Wow, who can miss this opportunity? What kind of return is this?
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Sep 29, 2022 05:55am
@Asif, That is called Erdoganomics. That is what he did in Turkey. Being a turkey he did not understand economics. Now Turkey's inflation is at 100% (comparatively at 30% our inflation is nothing)
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Sep 29, 2022 06:37am
1 person cannot change anything. Sherif brothers are fooling the public.
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Sep 29, 2022 06:53am
Someone should explain economics to him.
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Sep 29, 2022 07:11am
What kind of economics is this? Infact inflation is going to go up if interest rates are brought down. Dar is going to bury the economy in Sindh's floods
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Sep 29, 2022 08:34am
what is the deal behind doors?
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