Market closes at 43,037 points
The Pakistan Stock Exchange witnessed a bearish trend, again on Friday. It lost 197 points in the KSE-100 index during the first session. The market, after the first half of the day, stood at 43,037 points.
It created immense pressure on the Pakistani rupee which continued its fall hitting another record low against the US dollar in the interbank market.
The market has declined for the second consecutive day. On Thursday, PSX reported its largest single-day decline in 2021 and the third largest in history. The KSE-100 index lost 1,936 points costing investors a whopping Rs332 billion.
According to economists, one of the main reasons for the market tumble is Pakistan’s import bill, which reached $8 billion in November — the highest level of any month.
The trade deficit has reached $5.107 billion in November. According to the provisional data released earlier this week, this is the highest trade deficit recorded in a single month.
Experts say the sky-rocketing trade deficit has impacted the investors’ confidence and is making them trade with caution.
Another reason for the decline is the increase in interest rates. The State Bank of Pakistan (SBP) auctioned Treasury Bills on Wednesday. The three-month T-bills offered interest at the rate of 10.39% and the six-month T-bills were sold at an interest rate of 11.05%. The interest rate is higher than the policy rate of 8.75%.
It is predicted that the government will further increase the policy interest rate by 1% or 100 basis points in an attempt to control inflation.
Experts believe that the government could control and reverse market losses by immediately reducing imports because it was unlikely to succeed in increasing exports.
The $3b Saudi loan and $1bn IMF loan installment could also help, they say.
Additional reporting by Rizwan Alam.