Positive IMF review outcome hopes propel Pakistan stocks by 1.59pc
Business
Some experts are now hoping for rate cut on Monday, but a Reuters poll says it won’t happen
KARACHI (Web Desk) – The indication given by Finance Minister Muhammad Aurangzeb about possible rate cuts – although he didn’t give any timeframe – in the coming months and Pakistan’s ability to fulfilling all the conditions set by the IMF (International Monetary Fund) gave a big boost to the stock market, as KSE-100 Index jumped 1.59 per cent on Thursday.
At the same time, bargain hunting remained the immediate factor behind the surge as investors used the opportunity provided by selling pressure witnessed recently to their advantage.
Bargain hunting or value hunting refers to the activity of looking for goods that are good value for money, usually because they are being sold at prices that are lower than usual.
Reversing some of the massive losses suffered during the last two days, the benchmark KSE-100 Index again topped the 65,000 threshold and closed the session – shortened by Ramazan –at 65,064.26 after a gain of 1,015.82 points.
Meeting all the targets determined by the IMF means there shouldn’t any hurdles that could hamper the release of $1.1 billion – the remaining amount under the current $3bn Stand-By Arrangement (SBA) – after the second and the last review which has started in Islamabad on Thursday.
Read more: IMF praises Pakistan, but wants stricter policies including no cheap gas for fertiliser plants
Some experts are now expecting a rate cut on Monday when the central bank’s Monetary Policy Committee meets after Aurangzeb shared his vision about economy in an interview, giving a comprehensive future line of action.
"I do think during the course of this year, we will see the rates coming down," said the newly-appointed finance minister.
However, the majority doesn’t agree with this view which is reflected in the latest Reuters poll, suggesting that the State Bank of Pakistan (SBP) will maintain the interest rates at 22pc – an all-time high in the country’s history.
But the same poll says that these experts are expecting a rate cut in the April-June quarter, as the next Monetary Policy Committee meeting is scheduled in May.
Meanwhile, there is a caveat. The Federal Reserve is now believed to go for US rate cuts in June, thus delaying the much-awaited monetary easing, which may affect the decision in Pakistan too.
