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Tuesday, April 16, 2024

PSX Hits Historic Highs, Rupee Recovers

Pakistani rupee experienced a significant recovery against the US dollar, appreciating by over Rs2 to reach a one-week high of Rs286 in the inter-bank market.

Pakistan Stock Exchange (PSX) KSE-100 index soared past the 57,000-point benchmark, registering a remarkable increase of 422 points. This surge, breaking all previous records, was propelled by the staff-level approval of a $700 million loan tranche by the International Monetary Fund (IMF).

The bullish momentum continued, with the PSX benchmark KSE-100 index reaching an unprecedented high of 57,173 points, marking a testament to the positive economic indicators.

Farrukh Khan, the Managing Director of PSX, highlighted the pivotal role played by the timely completion of the IMF review in driving the market to new heights. Khan emphasized the impact of tough economic decisions undertaken by the caretaker government, providing crucial support to the ongoing rally at PSX.

With PSX gaining over 4,000 points in the last 10 days and a remarkable 34% increase in the past year, the stock market’s resilience reflects early signs of economic recovery and anticipation surrounding the upcoming general election.

Rupee Rebounds

Simultaneous to the PSX’s historic surge, the Pakistani rupee experienced a significant recovery against the US dollar, appreciating by over Rs2 to reach a one-week high of Rs286 in the inter-bank market.

This reversal marked the end of a 17-session depreciation run, providing relief to the currency that had witnessed a seven-week low of Rs288.14/$ just the day before.

Read More: IMF Approves $700 Million Payout to Pakistan in Milestone Economic Review

The positive shift in the rupee-dollar exchange rate was attributed to the successful negotiation of a staff-level agreement (SLA) with the IMF, signifying progress in the implementation of Pakistan’s economic program supported by the IMF Stand-By Arrangement (SBA).

Upon approval by the IMF’s Executive Board, Pakistan is poised to receive a disbursement of around $700 million, bringing the total disbursements under the program to nearly $1.9 billion.

Financial analysts anticipate an improvement in Pakistan’s foreign exchange reserve position, as the IMF agreement opens avenues for funding from multilateral and bilateral institutions.

This positive development aligns with broader international trends, where the US dollar stabilizes after recent volatility, supported by better-than-expected retail sales numbers and signs of a potential economic ‘soft landing.’

While the PSX and currency markets experienced upward trajectories, oil prices faced downward pressure on Thursday. Brent futures declined by 48 cents to $80.70 a barrel, extending losses from the previous session.

The drop in oil prices is attributed to concerns about lackluster energy demand from China and signals of higher supply from the United States. As the global economic landscape navigates uncertainties, the interconnected dynamics of currency parity and oil prices contribute to the broader narrative, impacting financial markets worldwide.

Investors and analysts keenly observe these fluctuations as indicators of the economic landscape’s resilience and responsiveness to key geopolitical and economic developments.