KARACHI – The Pakistan Stock Exchange (PSX) gained momentum in the outgoingweek as investor participation was comparatively high amid presence ofmarket moving triggers.
The benchmark KSE-100 index by gaining 173.93 points (0.51 per cent) closedat 34,377.61 points.
Traders, initially, were in a state of uncertainty and a bit of nervousnesson Friday as the JUI-F-led anti-government protest march moved towardsIslamabad with politicians agitating the participating crowd.
But later, the market managed to calm down and the index bounced back asheavy buying erupted in the current favourites, cement, oil marketingcompanies and blue-chip stocks in selected sectors.
The volume decreased 14.6 per cent to 157.1m shares, from 184.0m whiletraded value declined 6pc to $41.5m, as against $44.1m.
In the previous week, the stock market remained lackluster following theformal announcement of the Financial Action Task Force (FATF) to keepPakistan in the grey list till Feb 2020.
According to stock market analysts, simmering Pak-India tensions and thecurrent uncertain political situation in the country, and FATF’s warning toPakistan to fully comply with its recommendations for curbing terrorfinancing and money laundering – all had contributed to the bearish trendin the market in the previous weeks.
The Paris-based watchdog had mentioned that Pakistan had largely compliedwith some of the 40 action items but expressed serious concerns with theoverall lack of progress. It had cautioned the country to swiftly completeits full action plan by February 2020 to stave off the blacklist.——————————
*Rupee recovers against dollar*——————————
The Pakistani rupee in the outgoing week appreciated against the U.S.dollar with 23 paisa in the interbank and closed at Rs155.65 on Friday.
Likewise, in the open market, it gained its value by 25 paisa and closed atRs155.75 against the greenback with slight fluctuation in the whole week.
Earlier, the World Bank Group had forecasted Pakistan’s economic growth toslow down for the next two years as it continues to face anothermacroeconomic crisis due to massive twin deficits and low foreign reserves.
Despite significant devaluation, the WB still sees the rupee overvalued bythe end of September by approximately 4.8%.
In the last three months, the local currency was observed to significantlyrecover against the greenback in both interbank and open markets.
Analysts had expressed fear that the intense ongoing trade war between theUnited States and China would result in fluctuation of the U.S. dollar inthe local market, and the value of the Pakistani rupee would stabilisedepending on the measures taken by the government with appropriate economicpolicies.
Currency traders were of the view that the increasing inflows of remittancehave supported the local rupee in the market.
Until June this year, the rupee was observed to cumulatively depreciateagainst the greenback, which in turn, had resulted in increased prices ofgoods and hardships for the general public.
The SBP has let the rupee depreciate significantly in the inter-bank marketafter finalising an agreement with the International Monetary Fund (IMF)for a loan programme on May 12.
The IMF asked Pakistan to end state control of the rupee and let thecurrency move freely to find its equilibrium against the US dollar.
On the other hand, the World Bank Group has also supported the idea ofleaving the rupee free from state control in an attempt to give much-neededboost to exports and fix a faltering economy.
After the International Monetary Fund (IMF) lent the first tranche of$991.4 million to Pakistan, the local currency had depreciated massively.
The stringent conditions – on which the global moneylender has formallyapproved the bailout package of $6 billion for Pakistan – seemed to haveexerted more pressure on the local currency.