IMF deal boosts Pakistan’s financial markets

• Rupee snaps 17-session losing streak against dollar.
• PSX surpasses 57,000 points — its record.
• Pakistan is soon to receive $700 million from the IMF.

Following the staff-level agreement between Pakistan and the International Monetary Fund (IMF), the benchmark KSE-100 index of the Pakistan Stock Exchange (PSX) closed at 57,000 points, while the rupee also recovered against the dollar.

Pakistan, a day earlier, had reached a staff-level agreement with the IMF on the first review of its $3 billion bailout.

Following approval by the Fund’s Executive Board, Pakistan will have access to approximately $700 million, bringing total disbursements under the program to nearly $1.9 billion, the IMF said in a statement on Wednesday.

Today, the rupee snapped its 17-session losing streak after gaining Rs 0.76 against the dollar to close at Rs 287.38 against the dollar in the interbank market at the end of the day, data from the State Bank of Pakistan showed. The local currency had closed at Rs 288.14 on Wednesday.

The benchmark KSE-100 hit an intraday high of 57,549.26 points. However, it closed at 57,397.02 after gaining 716.96 points, or 1.26%, from its previous close of 56,680.06.

In a conversation with Geo.tv, Dr Khaqan Hassan Najeeb, a former adviser to the finance ministry, said the PSX was opened because of the staff-level agreement with the IMF. He added that the $700 million from the global lender would help Pakistan pave the way for “much-needed” external financing.

“The IMF approval means that the government has worked on fiscal consolidation as well as the change in energy prices that limits cyclical debt,” Dr Najeeb said.

The economist believes that the flow of external financing “will provide some comfort to the foreign exchange market as well as to increase supply and debt securities, including multilateral financing, program and project loans.”

He added that bilateral loans and conversions, friendly countries and commercial capital will start flowing in after the IMF deal.

“The rupee will of course be determined by the kind of flows we see and the kind of demand that is created from the import side. In the long run, I always say that the rupee’s parity with any foreign currency is a function of the country’s productivity,” said Dr Najeeb on the rupee appreciation.

Total trading volume increased to 1.25 billion shares. The value of shares traded during the day was Rs 37.4 billion.

Shares of 385 companies were traded. Of these, 220 stocks closed higher, 147 declined and 18 remained unchanged.

WorldCall Telecom was the volume leader with 386.3 million shares traded, gaining Rs 0.19 to close at Rs 1.59. It was followed by Cnergyico PK with 45.1 million shares, losing Rs 0.04 to close at Rs 4.70 and Pakistan Refinery Limited with 39.5 million shares, gaining Rs 0.73 to close at Rs 24.97 .