KARACHI: Pakistan’s equity market on Thursday shed more than 500 points amid treasury bond yield and saving rate hikes, though the national currency continued to recover against the United States dollar, dealers and analysts said.
The benchmark KSE 100 index declined by 518 points, or 1.21 percent, to close at 42,237, as the government raised national saving certificate profit rates and investors remained concerned about electricity tariff hike by the government to meet a key condition of the International Monetary Fund (IMF).
“Stocks declined amid thin trade due to the surge in treasury bond yields by 75 bps [basis points] to 15.25 percent and a slump in global equities,” Ahsan Mehanti, chief executive officer of Arif Habib Corporation, told Arab News.
“The surge in NSS [National Saving Scheme] rates and a likely announcement regarding higher power prices to restore the IMF [loan] program [of $6 billion] played a catalyst role in the bearish close today,” he added.
Pakistan has revised profit rates on several national saving certificates and schemes by 36 to 150 bps. The rate of profit on special saving certificates has been increased by 60 bps to 13 percent. Similarly, regular certificate rate has also gone up by 36 bps to 12.36 percent while savings account rate has spiked by 150 bps to 12.25 percent.
Meanwhile, the Pakistani rupee continued to recoup some of the losses made during the recent rally against the greenback.
The national currency has been gaining strength amid expectations that Pakistan will be able to revive the IMF loan facility after the authorities raised the petroleum product prices.
The rupee gained 0.14 percent during the trading in interbank market on Thursday and closed at Rs197.59 against the dollar.
The currency hit its lowest level of Rs202.01 on May 26 against the greenback amid uncertain outcome of talks between Pakistan and the IMF in Qatar.
“The government’s measures to stabilize currency trading and hope for the revival of the IMF program have played a major role in the recovery of the rupee against the US dollar in the interbank market,” Abdul Azeem, head of research at Spectrum Securities, told Arab News.
Pakistan desperately needs external financial inflows to boost its falling foreign exchange reserves that can hardly cover two months of import payments. According to an official statement, the central bank reserves decreased by $366 million by the end of the previous week. They currently stand at about $9.72 billion.
Pakistan is expecting an immediate release of around $1 billion from the IMF after rolling back subsidies on petroleum products that would boost its forex reserves. The country has so far received $3 billion from the fund while the remaining amount is expected after the resumption of the program.
The IMF recently said that considerable progress had been made in its talks with Pakistan, though it also emphasized the urgency of removing fuel and power subsidies to achieve the program objectives.
