KSE-100 records highest ever monthly gain in points

July 31, 2023 (MLN): Pakistan stock exchange (PSX) posted the highest ever monthly gain in points, with the benchmark KSE-100 index gaining a staggering 6,582pts or 15.9% in the month of July.

The benchmark KSE-100 index closed the month at 48,035 points, breaching the 48,000 mark after 24 months.

The average traded volume of the KSE-100 Index during the month was 186.38 million shares, up by 2.35x MoM.

Similarly, this was the second-highest monthly gain in percentage terms in the last 10 years, just behind April 2020.

*Data for last 10 years only

The rally was mainly fueled by the Staff Level Agreement (SLA) which was signed with the International Monetary Fund (IMF) on June 30, a move that led Fitch Ratings to upgrade Pakistan's Long-Term Foreign-Currency Issuer Default Rating (IDR) to 'CCC' from 'CCC-'.

The IMF deal, on top of other countries' support, gave Pakistan the much-needed boost, taking the total liquid foreign exchange reserves to $13.53 billion for the week ending July 21, 2023.

Rupee stabilizes as foreign inflows boost reserves

The Pakistani rupee has also started to show stability on the back of significant foreign inflows.

This boost in reserves was attributed to substantial deposits received during the week, which included a $1.2bn immediate disbursement received from the International Monetary Fund (IMF), a $2bn deposit from Saudi Arabia, and an additional $1bn deposit from United Arab Emirates (UAE).

China Exim Bank also approved extending Pakistan’s $2.4bn loan for a time span of two years on July 27, on top of a $600 million loan rollover on July 18 which further helped strengthen the country’s Foreign Exchange Reserves.

Additionally, Federal Minister for Finance and Revenue Senator Ishaq Dar on July 30 pledged to raise the country’s Foreign Exchange (FX) reserves to $15bn within the next 7 weeks.

The country also recorded a fourth consecutive current account surplus in June, jumping by 30.82% MoM to stand at $334 million.

Monetary policy and Inflation

In today's meeting, the Monetary Policy Committee (MPC) of the State Bank of Pakistan (SBP) decided to keep the policy rate unchanged at 22%, likely implying the end of the hawkish cycle.

After witnessing the plague of inflation which had mercilessly ruined the economy in FY23, inflation has started to decelerate since June 2023 when CPI was recorded at 29.4% compared to May 2023 CPI recorded at 38%.

Similarly, the CPI is expected to ease at around 26% in July 2023, offering further hope for the nation's citizens.

Copyright Mettis Link News