Losses at Pakistan stock market amid jitters over interest rate hike

Stockbrokers monitor the share prices during a trading session at the Pakistan Stock Exchange (PSX) in Karachi, Pakistan, on June 3, 2022. (AFP/File)
Short Url
Updated 28 November 2022
Follow

Losses at Pakistan stock market amid jitters over interest rate hike

  • Central bank on Friday raised interest rate by 1% citing inflationary pressure 
  • Pakistan’s inflation rate was recorded at 26.6% in the month of October

KARACHI: Pakistan's stock market shed more than 865 points during the trade on Monday, amid jitters from a hike in the interest rate. 

Pakistan’s central bank decided on Friday to jack up key policy rate by 100 basis points to 16 percent, citing inflationary pressure on the economy which it said had not toned down yet. 

But the hike sent jitters through the Pakistan Stock Exchange since it opened Monday morning. 

“The market has reacted to the unexpected rise in the policy rate by 1 percent,” Ahsan Mehanti, CEO of the Karachi-based Arif Habib Corporation holding company, told Arab News. 

“The appointment of the new army chief and end of long march eased off pressure at equity market, otherwise the reaction would have been much severe.” 

The benchmark KSE100 index, which lost 650 points Monday morning, shed another 300 points by the afternoon. The index was at 41,972 points by the time this report was filed. 

On Friday, the central bank said the decision to raise interest rate was made to ensure that elevated inflation could not get entrenched and begin to risk financial stability, hoping for higher growth on a more sustainable basis. 

It said the higher inflation was driven by persistent global and domestic supply shocks that were also raising costs, amid the ongoing economic slowdown. 

Pakistan’s inflation rate has hovered around historic highs in recent months and was recorded at 26.6 percent in October. 

The central bank now expects the average inflation to go up to 21-23 percent during the current fiscal year (FY23), owing to higher food prices and core inflation. 

Pakistan has also witnessed an economic slowdown in the wake of the recent floods that have damaged huge infrastructure and agriculture output. 


Pakistan assembly speaker, Indian FM shake hands in first high-level contact since May

Updated 5 sec ago
Follow

Pakistan assembly speaker, Indian FM shake hands in first high-level contact since May

  • Tensions persist between India and Pakistan after they engaged in brief military conflict in May this year
  • Pakistan assembly speaker, Indian FM both attend former Bangladesh PM Khaleda Zia’s funeral in Dhaka

ISLAMABAD: Pakistan’s National Assembly Speaker Sardar Ayaz Sadiq and India’s External Affairs Minister Subrahmanyam Jaishankar shook hands in Dhaka on Wednesday, establishing the first high-level contact between officials of both countries since their brief military conflict in May. 

Sadiq and Jaishankar arrived in Dhaka to attend the funeral of Bangladesh’s first female prime minister Khaleda Zia, who passed away earlier this week at the age of 80 after prolonged illness. Diplomats from several countries attended Zia’s funeral on Wednesday, which drew large crowds to the Bangladeshi capital. 

Tensions persist between nuclear-armed neighbors India and Pakistan, who engaged in a four-day military conflict in May this year. The conflict was triggered when India blamed Pakistan for supporting a militant attack in Indian-administered Kashmir in April that killed over 20 tourists. Pakistan denied involvement and called for a transparent probe into the incident. 

“Sardar Ayaz Sadiq, Speaker of the National Assembly of Pakistan, exchanges greetings with Indian External Affairs Minister S. Jaishankar in Dhaka on Wednesday ahead of the funeral program of former Bangladesh Prime Minister Khaleda Zia,” the official X account of Bangladesh’s Chief Adviser Muhammad Younus wrote. 

https://x.com/ChiefAdviserGoB/status/2006340330585833665

Sadiq also met Zia’s son Tarique Rahman, the acting chairperson of the Bangladesh Nationalist Party (BNP), to convey condolences over his mother’s demise from the people and government of Pakistan, the Pakistan High Commission in Bangladesh said.

“During the meeting, he recalled Begum Zia’s remarkable political leadership and noted her pivotal role in promoting historical affinities, mutual respect and cooperation between our two nations,” the high commission wrote on social media platform X.

https://x.com/PakinBangladesh/status/2006313161088204976

Senior officials from both India and Pakistan have refrained from shaking hands or exchanging pleasantries since the May conflict, as tensions persist between the two sides. 

The May conflict saw both countries exchange artillery fire, pound each other with fighter jets and trade missiles and drone strikes before Washington brokered a ceasefire on May 10. 

Sadiq is expected to meet senior officials of Bangladesh’s interim government during his trip, according to an earlier statement issued by his office.

Prime Minister Shehbaz Sharif had described Zia as a “committed friend of Pakistan” on Tuesday, praising her role in Bangladesh’s political life and expressing solidarity with the Bangladeshi people during what he called a difficult moment.

Zia, who served three terms as prime minister, led the BNP and remained a central figure in Bangladeshi politics despite years of ill health and imprisonment under the government of her longtime rival, Sheikh Hasina. She was released last year following Hasina’s ouster after a violent uprising.

Pakistan and Bangladesh were part of the same country until Bangladesh’s secession following a bloody civil war in 1971, an event that has long cast a shadow over bilateral ties. Relations remained largely strained for decades, shaped by historical grievances and political mistrust.

However, Islamabad enjoyed comparatively warmer ties with Dhaka during Zia’s tenure than under Hasina.

Engagement between Islamabad and Dhaka has increased since Hasina’s removal and the formation of an interim administration, with both sides signaling interest in improving political, diplomatic, economic and security ties.