PSX bounces over 2,373 points on the back of IMF deal

F.P. Report

KARACHI: The Pakistan Stock Exchange was witnessing a huge surge on Monday – the first working day after the country clinched the $3 billion deal with the International Monetary Fund (IMF) – as the benchmark KSE-100 Index gained 2,446 points.

At close, the KSE-100 settled at 43,899 level.

Earlier at 9:37am, the KSE-100 Index was, however, recorded at 43,439.33 at which point the trading had to be suspended because of the volatile nature of the market, just seven minutes after the session started.

“Halt market” mechanism springs into action if the index gains or declines over 5 per cent in during the session.

But when the trading was resumed 10:42am, the bullish sentiments continued to rule as the KSE-100 Index climbed by 2,372.93 points, or 5.72 per cent, to 43,825.61 [11:05am].

The latest boost in the stock market comes as the US dollar depreciated against the rupee in open even during the Eid holidays thanks to the successful arrangement reached with the world’s top lender.

In fact, it was available for even below the official – interbank – rate of Rs285.99 in some cases as more and more people started dumping the US dollars in the market they had hoarded or kept as financial guarantee amid a turbulent economy.

Some experts are of the opinion that the rupee may gain at least Rs30 rupees during the next one of two days.

On June 30, Pakistan managed to get the $3 billion staff-level agreement done with the IMF after months of wrangling – on the very day the previous deal was set to expire.

“The IMF staff and the Pakistani authorities have reached a staff-level agreement on policies to be supported by a Stand-by Arrangement (SBA). The staff-level agreement is subject to approval by the IMF Executive Board, with its consideration expected by mid-July,” the IMF said.

The IMF staff team led by its mission chief to Pakistan – Nathan Porter – held in person and virtual meetings with the Pakistani Authorities to discuss a new financing engagement for Pakistan under a Stand-by Arrangement (SBA).

“I am pleased to announce that the IMF team has reached a staff-level agreement with the Pakistani authorities on a nine-month Stand-by Arrangement (SBA),” Porter said, adding, “The full and timely implementation of the programme will be critical for its success in light of the difficult challenges.”

Under the new deal, Pakistan has to meet several conditions and targets set by the IMF including the reforms in the power sector which means tariff hike for both electricity and gas as well as more interest rate hikes while letting the market determine the rupee’s exchange rate.