After Rupee devaluation, Stock Market hit hard by worsening economic situation
ISLAMABAD - The rupee’s weakness in the Interbank today also took toll on the stock market, which was down over 2% or 820 points around 1:45pm in intra-day trading.
A higher key interest rate will make borrowing expensive, taking toll on the private sector, while a weaker rupee would increase the cost of doing business, especially for companies that are import-dependent.
“The higher interest rate and weaker rupee increases the cost for companies,” said Ahsan Arshad, deputy head of research at Taurus Securities. “This will affect aggregate demand and is likely to slow down growth. Naturally, it will affect earnings of listed companies, and this is why you see a bearish trend at the stock market.”
The over 800-point plunge brought the index below the 40,000 mark with nearly all sectors landing deep in the red as a weaker rupee took toll on market sentiment.