Rupee depreciates by 24 paisa against dollar; PSX gains 311 points

Yesterday, the local currency depreciated by 40 paisa in the interbank market.

KARACHI (Dunya News) - The Pakistani rupee continued to lose its strength against the US dollar as it slipped by 24 paisa in the interbank market and hit Rs157.5 during the early trade hours on Wednesday.

Yesterday, the local currency depreciated by 40 paisa in the interbank market.

In previous weeks, the rupee was observed to cumulatively depreciate against the greenback, which in turn had resulted in increased prices of goods and hardships for the general public.

The SBP had let the rupee depreciate significantly in the inter-bank market after finalising an agreement with the International Monetary Fund (IMF) for a loan programme on May 12.

The IMF has asked Pakistan to end state control of the rupee and let the currency move freely to find its equilibrium against the US dollar.

On the other hand, the World Bank Group has also supported the idea of leaving the rupee free from state control in an attempt to give much-needed boost to exports and fix a faltering economy.

The local currency depreciated massively despite receiving the first tranche of $991.4 million from the International Monetary Fund (IMF).

The stringent conditions – on which the global moneylender has formally approved the bailout package of $6 billion for Pakistan – seem to have exerted more pressure on the local currency.

The gradual drop in the rupee had come due to high demand for the dollar against thin supply as the country continued to make aggressive international payments to partially pay off huge foreign debt and for imports.

Economists are of the view that effective measures must be implemented on the priority basis to recover the state from the balance of payment deficit.

Besides increased demand of the greenback in the local market, they have termed ‘balance of payments deficit’ as the main reason in the recent hike in the value of the US dollar.

Moreover, they consider that state’s exports and investment are required to grow significantly, and the imports must be reduced to remove pressure on the local currency.

According to experts, the government must ensure implementations on economic policies after the deal with the IMF.

It is anticipated that the US dollar rate would fluctuate for some time, and the value of the Pakistani rupee would stabilise after proper implementation of the economic policies.

PSX gains 311 points

On the other hand, Pakistan Stock Exchange (PSX) witnessed a positive trend on Wednesday when the benchmark KSE-100 index gained 311 points and recovered to 30,896 points.

On Monday, PSX had lost 830 points and closed at 30,520 points.

In the last week, the KSE-100 index gained massive 2,585 points to close at 31,350 points.

Hovering in the green throughout the previous week on the back of rumors that "Pakistan might exit the FATF grey list", as many as 174 million shares of indexed companies changed hands during the session. The market value of the shares traded clocked in at Rs424 billion.

Over the course of previous week, foreign investors sold a total of $4900,000 worth of shares.

Earlier, the recent simmering tensions between nuclear-armed Pakistan and India over Kashmir dispute had pushed investors to adopt cautious behaviour in the trading.

Moreover, since the passage of the financial budget for the fiscal year 2019-20, the stringent policies had been reflecting themselves in the downfall of the stock market.

According to a JS Global report, "The local bourse closed positive on the rumors that Pakistan might exit the FATF grey list." Market analysts are expecting a positive momentum at the bourse in the days to come.