PSX sheds nearly 1,000 points amid political uncertainty

The Pakistan Stock Exchange (PSX) witnessed Wednesday a massive selling pressure as KSE-100 index plummeted by nearly 1,000 points during intraday trading, reported 24NewsHD TV channel.

The KSE-100 index opened at 43,504.36 points on Wednesday, and it had shed nearly 1,000 points, or around 2.28 per cent, to 42,513.78 points by 1pm, according to the PSX website.

Commenting on the meltdown at the PSX, economic experts laid emphasis on urgent decisions by the federal government, stating that the government’s sitting-on-the-fence was eroding investors’ confidence.

They also stressed the need for quickly resuming the International Monetary Fund (IMF) programme to find a foothold, warning the government of severe consequences if the programme continued to be delayed.

They also held political uncertainty responsible for the slump in the market as the confidence of investors is not high due to the domestic situation “despite our market is cheap at present in terms of profit in the whole region.”

It is to be noted here that the PSX had witnessed a meltdown two days ago during which the benchmark KSE-100 index had plummeted by 1,447.67 points.

The situation has also caused the investors to worry about the country’s debt repayment capacity amid depleting foreign exchange reserves.

In recent meetings with new Finance Minister Miftah Ismail, the IMF has linked the continuation of its loan programme with the reversal of fuel subsidies, which were introduced by the previous Pakistan Tehreek-e-Insaf (PTI) government.

Nevertheless, Prime Minister Shehbaz Sharif twice rejected the summaries of the Oil and Gas Regulatory Authority (OGRA) to increase fuel prices.

The PML-N coalition government had vehemently criticised Imran Khan’s government for ‘derailing’ the IMF programme through fuel subsidies, but, despite being at the helm for a month, it has not reversed the subsidies.

The finance minister has also repeatedly termed these subsidies not feasible as they are costing the government Rs120 billion a month.

Nevertheless, the PML-N led government is still selling petrol at Rs145 per litre despite Miftah Ismail’s statement that it should have been priced at Rs245 per litre according to the agreement the former government did with the IMF.

Meanwhile, the US dollar’s price Wednesday broke all records against the Pakistan rupee as it rose by Rs 1.41 during the business in the interbank.

This increase means the US dollar breaches the critical threshold of Rs190 in the interbank market.

With this increase, the US dollar is being traded at Rs190.07 for first time in history in the interbank trading further deepening the economic woes of the country.

Yesterday, it closed at Rs188.66.

Although, it was being hoped that the dollar’s rate would come down once the new government took over in the country, and initially there was slight decrease in its price, but later all hopes dashed as the currency’s value started increasing with each passing day.

This upward trend is being attributed to the uncertainty with respect to the International Monetary Fund (IMF) programme, coupled with an absence of direction from the government on significant economic policies and a roadmap as well as unstable political situation in the country.