ISLAMABAD – The rupee’s weakness in the Interbank today also took toll onthe stock market, which was down over 2% or 820 points around 1:45pm inintra-day trading.

A higher key interest rate will make borrowing expensive, taking toll onthe private sector, while a weaker rupee would increase the cost of doingbusiness, especially for companies that are import-dependent.

“The higher interest rate and weaker rupee increases the cost forcompanies,” said Ahsan Arshad, deputy head of research at TaurusSecurities. “This will affect aggregate demand and is likely to slow downgrowth. Naturally, it will affect earnings of listed companies, and this iswhy you see a bearish trend at the stock market.”

The over 800-point plunge brought the index below the 40,000 mark withnearly all sectors landing deep in the red as a weaker rupee took toll onmarket sentiment.