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Business Recorder
23-04-2025
- Business
- Business Recorder
Selling returns to PSX, KSE-100 Index down 882 points
Selling returned to the Pakistan Stock Exchange (PSX) as it benchmark KSE-100 Index lost 882 points during intra-day trading on Wednesday. At 11:40am, the KSE-100 Index was hovering at 117,547.94, down by 882.41 points or 0.75%. On Tuesday, the benchmark index had closed flat after range-bound trading. The International Monetary Fund (IMF) revised downward gross domestic product (GDP) growth rate projection by 0.4% for Pakistan to 2.6% for fiscal year 2025 against earlier projection of 3% (January 2025). The Fund in its latest report, 'World Economic Outlook (WEO) a critical juncture amid policy shifts', projected GDP growth for Pakistan at 2.6% for 2025 and 3.6% for 2026. The IMF in January 2025 WEO had projected GDP growth rate for Pakistan at 3% for fiscal year 2025 and 4 percent for 2026. Meanwhile, Fitch Ratings projected that Pakistan would gradually devalue its currency to avert likely pressure on the current account as economic activities picked up in the country. Bloomberg reported that 'the ratings company sees the rupee falling to 285 against the dollar by the end of June and weakening further to 295 by the end of the next fiscal year in 2026,' citing Krisjanis Krustins, Director of Asia Pacific Sovereign Ratings at Fitch. Internationally, stock markets were enjoying a much-needed relief rally in Asia on Wednesday after President Donald Trump said he had no plans to fire the head of the Federal Reserve, and hinted at lower tariffs for China. The dollar jumped across the board after Trump walked back on threats to dismiss Fed Chair Jerome Powell, which had badly shaken investor confidence in U.S. assets. Trump also reiterated he wanted to do a deal with China where tariffs would not be anywhere near 145%, but added that he would set the terms of a deal if Beijing did not enter talks. Earlier on Tuesday, Treasury Secretary Scott Bessent had been reported saying he believes there will be a de-escalation in U.S.-China trade tensions, but negotiations with Beijing have not yet started and would be a 'slog'. 'While it is still early days, the mood in the market is evidently shifting and what was a strong 'sell America' vibe flowing through markets yesterday has in part reversed,' said Chris Weston, head of research at broker Pepperstone. 'Markets are becoming ever more conditioned to the President shooting from the hip and then reversing the stance like it was never a big issue.' Investors reacted by buying back into beaten-down stocks and Japan's Nikkei jumped 2.3% in early trade, while South Korea's main index rose 1.2%. MSCI's broadest index of Asia-Pacific shares outside Japan (.MIAPJ0000PUS), opens new tab added 0.3%. Wall Street extended an overnight bounce as S&P 500 futures climbed 1.8% and Nasdaq futures 2.0%. Sentiment had been helped by some upbeat earnings results, and even Tesla rebounded 5% after the bell despite missing forecasts. This is intra-day update
Business Recorder
22-04-2025
- Business
- Business Recorder
Fitch forecasts Pakistan rupee at 285 against US dollar by June, 295 by FY26 end
Fitch Ratings has projected that Pakistan will gradually devalue its currency to avert likely pressure on the current account as economic activity picks up in the country. Bloomberg reported that 'the ratings company sees the rupee falling to 285 against the dollar by the end of June and weakening further to 295 by the end of the next fiscal year in 2026,' according to Krisjanis Krustins, Director of Asia Pacific Sovereign Ratings at Fitch. 'Pakistan's central bank will allow the rupee to gradually weaken to manage pressures on the current account as the economy gains pace,' the global media outlet added. The local currency hit an all-time low of Rs 307.10 against the US dollar in the first week of September 2023, amid a surge in dollar smuggling from Pakistan to neighboring countries. The government's crackdown on illegal currency dealers helped the Pakistani rupee recover to around Rs277/USD in the first half of 2024. The domestic currency has cumulatively depreciated by 0.86%, or Rs 2.43/USD, during the first eight months of the current fiscal year 2024-25. It stood at Rs 280.77/USD on Tuesday, compared to Rs 278.34/USD on June 28, 2024, according to SBP data. Meanwhile, Pakistan's current account posted a significant surplus of $1.2 billion in March 2025, compared to a revised deficit of $97 million in the previous month, SBP reported last week. This brings the total current account surplus to $1.86 billion in the first nine months of the current fiscal year (9MFY25), in stark contrast to a deficit of $1.65 billion during the same period of the previous fiscal year. SBP Governor Jameel Ahmad stated last week that Pakistan's foreign exchange reserves have dropped by $2 billion over the past couple of months due to foreign debt repayments, bringing the total down to $10.6 billion. However, he anticipated that Pakistan would receive $4–5 billion from external sources by the end of June, including inflows from global financial institutions. In light of this, he revised the projection for SBP-held foreign exchange reserves to $14 billion by the end of June 2025, up from an earlier estimate of $13 billion. Imports rose to $5.7 billion in March, indicating a pickup in economic activity, he added. The governor also projected that the economy would grow by 3% in FY25, compared to 2.5% in FY24. The IMF Executive Board is expected to consider approving the second tranche of $1 billion under the Extended Fund Facility (EFF) for Pakistan by the end of April or early May 2025. The expected decision follows a staff-level agreement reached between the IMF and Pakistani authorities under the $7 billion EFF on March 25, 2025. The global financial institution has repeatedly recommended that Pakistan allow market forces to determine the rupee-dollar parity based on the supply and demand dynamics in the inter-bank market.
