Stocks, rupee make impressive weekly gains as market believe rate hikes have ended
Business
Improved microeconomic indictors are also contributing to the rally
KARACHI (Web Desk) – The Pakistan rupee was down 0.04 per cent, or 10 paisa – against the US dollar on Friday but made a net gain of Rs1.13, or around 0.40 pc, during the week against the US dollar in official exchange rate, as the country, especially the investors, is hopeful of improved inflow in the shape of foreign investment and privatisation of state-owned enterprises.
Hence, the rupee closed the week on Rs285.37 after recovering some of the lost ground – reflecting the confidence expressed by Caretaker Prime Minister Anwaarul Haq Kakar who had claimed some days back that the latest slide experienced by the currency was just temporary as the money markets had stabilised.
Read more: Dollar slips for second consecutive week on bets US rates have peaked
It means the local currency has been able to halt and reverse the trend which saw the local currency dropping to Rs288.14 on Nov 15 after a weeks-long earlier surge, enabling it to recover from a record-low of Rs307.10 to reach Rs276.83 in mid-October.
But the Pakistan Stock Exchange’s performance remained mindboggling, as it made another history on Friday with the benchmark KSE-100 Index closing at 59,086.65, setting yet another record in the ongoing streak which has so far saw the stock market shattering multiple ceilings.
Thus, the KSE-100 Index reached the current level with a latest weekly surge of over 2,000 points, or around 1.9pc, against 57,063.16 – the value recorded on Nov 17.
Although the weekly inflation shown by the Sensitive Price Index (SPI) stayed over 40pc for the second consecutive week thanks to rising gas and food prices, there is an impression that the inflation won’t jump back to the level seen earlier, meaning there is no need for further rate hikes, amid continuously improving macroeconomic indicators.
The interest rates are currently frozen at 22pc – the highest in Pakistan’s history – after the country saw the inflation climbing to a record high, fuelling a cost-of-living crisis and pushing millions into poverty.
Meanwhile, another factor contributing to the bullish market is the fact that the overall oil prices are on a decline despite the production cuts introduced by the OPEC+ and the Middle East turmoil.
Read more: Oil prices: Brent down 1pc, WTI decline 2pc to close the week
It means that a combination of the stronger rupee and stable oil prices in global markets will ensure that Pakistan won’t witness any increase in fuel rates, thus protecting the country from any further inflationary impacts.
