Stocks are rising, the dollar is falling
KARACHI / ISLAMABAD: Trading halted at the Pakistan Stock Exchange (PSX) on Friday after the KSE-100 benchmark lifted as in almost 1,500 points — a 5% increase — a day after the Pakistan State Bank (SBP) slashed the policy rate by 200 points in a surprise move. The market opened at 10:15am, in the green with the benchmark index almost 1,000 points. By 10:50am, when trading was halted after circuit breaker activation, the index was trading at 32.888 – a rise of 1.559 points or 5pc.
The index continued to increase its gains for another 20 minutes after trading resumed at 11:55am, peaking at 33.257 points for the day (up 6.15pc or 1.928 points) about 12:15pm, after which it shed some 430 points to close at 32.827 – up 4.8pc or 1.498 points. Muhammad Faizan Munshy, Next Capital Limited’s head of foreign sales, said domestic equities have inched the highest since 2009 after the central bank cut its main policy rate. “The approval by the International Monetary Fund (IMF) of a fast-track facility fund to Pakistan of almost $1.4 billion also fueled bullish emotions,” he said.
He said the rupee had gained nearly two per cent as international donors postponed payments on loans. “This has also become proving beneficial to the stock market,” he said. A day earlier, SBP had reduced the country’s policy rate by 200 points to nine per cent for the third time in less than a month in an emergency meeting of the monetary policy committee. The decision was taken “in light of the projections of decreased growth and inflation” released earlier this week by the International Monetary Fund (IMF), a statement released by the SBP had said.
The statement added to the committee “remains ready to take whatever further action is necessary in response to the coronavirus’ evolving economic effects.” The committee noted the impact on the global economy of the coronavirus pandemic, which it said was “expected to enter the sharpest downturn since the Great Depression.”