KARACHI:
As local capital markets anticipate a further raise in the key policy rate by the central bank to manage increasing inflation, the Pakistani stock market and the Pakistani rupee both fell to historic lows on Tuesday.
The benchmark KSE-100 Index of the Pakistan Stock Exchange (PSX) fell roughly 1.6%, or 850 points, to 46,625 points at around 2pm on Tuesday.
The Pakistani Rupee dropped by another R1, reaching a new all-time low of roughly R303 to the US Dollar around lunchtime.
In the first week of August, PSX reached a new high of almost 48,600 points, a level not seen in six years.
Samiullah Tariq, head of research at Pak-Kuwait Investment Company, blamed “expectation of an increase in interest rates” for the market’s decline.
A Phased Transition of Export Financing Schemes Is Being Initiated by the SBP.
Muhammad Sohail, CEO of Topline Securities, has warned that “falling rupee and lower than expected June financial result” are putting downward pressure on the market.
Capital markets appear to be feeling the effects of the economic, social, and political turmoil.
Continued protests by businesses and consumers over rising electricity prices, inflation, and the likelihood of an increase in the SBP interest rate have a negative effect on the economy.
Investors are reacting to the crisis by selling stocks at depressed prices, which is hurting the profits of PSX-listed companies.
