Pakistan Stock Exchange’s benchmark KSE-100 index has declined by 2.3 per or 930 points to close above 39,000 mark, its lowest weekly closing in 74 weeks.
Resurgence of domestic political noise where market sensed a likely repeat of 2014-esque sit-ins by certain opposition parties given release of inquiry report, recent statements by their top politicos, and precedence already set by religious parties’ earlier sit-ins, had dented sentiments during the week.
Meanwhile 2017’s favorite gas marketing Sui Co’s got a reality check when OGRA proposed new tariffs that may reduce their profitability. Oil prices took a mid-week dip as well as US gasoline inventories came in higher than expected, while PSX’s new proposals for circuit breakers also rattled retail investors.
Foreigners bought $1.0 million during the week (vs. selling of $39.5 million last week). On the local front, Insurance sector was net buyers of $6.4 million whereas individuals were net sellers of $9.7 million.
US dollar rate started stabilizing after deteriorating unexpectedly in the interbank market. After shooting to Rs 110 in the morning, the dollar was being traded for Rs 106 in the interbank market around noon, which later on closed at Rs 107.
SBP is of the view that this market-driven adjustment in the exchange rate will contain the imbalance in the external account and sustain higher growth trajectory.
This announcement from SBP enough set a course for long term which hints that local rupee might adjust more as supply constraints might still haunt foreign exchange dealer. Nobody could predict by how much volume the rupee to dip but there is likelihood that before end of this calendar domestic currency might see another bout of drop of as much of Re 1 to Rs. 1.50.
Political chaos might not allow the index to score big, otherwise adjustment of rupee has been a good news for foreign investors as they are sitting on the benches for long waiting for currency to dip by nearly 6 percent.
