Weekly Market Roundup and Review

During the past week, PKR depreciated by 4.99% in what the Central Bank called a ‘Market Driven Adjustment’ which is the official euphemism for Currency Devaluation.

According to the SBP, the adjustment is reflective of the country’s external Balance of Payments position which is under pressure due to a large trade deficit. Data published by the PBS shows the July-May trade deficit stood at $33.886 Billion compared to $29.882 Billion from the corresponding period last year.

Overseas Pakistani workers remitted US$18.028 Billion in the first eleven months (July to May) of FY18, showing a growth of 2.95 % compared with US $17.511 Billion received during the same period in the preceding year.

Pakistan’s total liquid foreign reserves on June 08, 2018 stood at US$ 16.45 Billion up 0.23% compared to previous week.

Market Analysts and traders are of the view that further depreciation in PKR’s value is expected before upcoming elections.

Other Economic Releases:

• Pakistan’s LSM Index Grew by 5.76% during July-April 2018, however it was down 16.08% compared to March 2018.
• Weekly SPI for the combined group grew by 1.71% compared to previous week and 3.59% compared to corresponding period from last year.
• Auto sales decreased by 15.40% in May 2018 with 18,223 Units sold compared to 21,540 units sold in April 2018. However, the July- May sales grew by 16.32% compared to the corresponding period last year.

Upcoming Economic Releases:

• Foreign Investment Figures
• Export and Import details
• Credit/Loans Details for May

Equity Round up:

KSE100 index reacted negatively to the depreciation in PKR with the index losing 702 points on Tuesday before recovering slightly in the remaining sessions. However, it closed down 267.43 points or 0.61% compared to previous week.             

FED, ECB and Bank of Japan:

In other Central Bank news, the US Fed increased its interest Rate by 0.25 bps to 1.75 to 2.00 %.

The European Central Bank announced its intention to end the Quantitative Easing Program by the end of the year.  

The Bank of Japan kept its short-term interest rate target at minus 0.1 %.