In positive economic development, Pakistan Rupee rises against US dollar and PSX registers huge growth
KARACHI – The Pakistani rupee in the outgoing week appreciated against the U.S. dollar with 10 paisa in the interbank and closed at Rs155.27 on Friday.
Likewise, in the open market, it was being traded at Rs155.40 against the greenback with slight fluctuation in the whole week.
The stock market demonstrated bullish trend during the whole trading week lifting the benchmark KSE 100-share Index by 341 points to 37,925.79 points on the last trading day (Friday).
On Friday at close, the index recorded an increase of 824.48 points, or 2.22%. Overall, trading volumes increased to 243 million shares compared with Thursday’s tally of 232.6 million. The value of shares traded during the day was Rs8.1 billion.
With the continuous positive momentum throughout the week, the bulls rule the KSE-100 and cumulatively the index went up and by the close of market, it managed to inch closer to the 38,000-point mark, according to the week-long PSX trading data.
Over the course of the week, foreign investors bought shares worth USD 8.4 million, which in turn contributed to the total volume of shares amounting to Rs33 billion.
Earlier during the week, State Bank of Pakistan Governor Reza Baqir had hinted at maintaining the status quo in the monetary policy, which provided much-needed clarity and helped the bourse trade in the green zone.
The rally almost erased the hefty losses borne on Thursday. In the monetary policy announcement, the State Bank of Pakistan (SBP) kept the interest rate unchanged at 13.25%.
Foreign investment in government backed treasury bills was recorded at almost USD 800 million since the beginning of FY20, attributable to waning concerns on the economic front has effectively supported the slight growth in FX reserves of the SBP and consequentially, kept the exchange rate parity stable.
The state bank said market sentiment has begun to gradually improve on the back of sustained improvements in the current account and continued fiscal prudence.
It said that the current account balance recorded a surplus in October 2019 after a gap of four years, a clear indication of receding pressures on the country’s external accounts together with the end of deficit monetisation has qualitatively improved the inflation outlook.
It outlined that recent economic data suggest that economic activity is strengthening in export oriented and import competing sectors while inward oriented sectors continue to experience a slowdown in activity.
Specifically, large-scale manufacturing (LSM) shows gains in electronics, engineering goods and fertilizer sectors and decline in auto, food, and construction allied industries of steel and cement.
The latest production estimates of major kharif crops suggest that agriculture sector is likely to grow in line with projections although cotton production is likely to remain below target.
The external sector continued to show steady improvement, reflecting the benefits of recent policy adjustments and other factors. In the first four months of the current fiscal year, the current account deficit contracted by 73.5 percent to 1.5 billion dollars.
This improvement reflected a notable reduction in imports, a modest growth in exports and steady workers’ remittances.