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Pakistani rupee firms, while stocks end flat
Pakistani stocks ended flat in thin trade yesterday following a visit to the main exchange by the government's top economic adviser during which no date was set for the removal of a floor propping up the index.
- Reuters
- Published: 00:00 November 1, 2008
Karachi: Pakistani stocks ended flat in thin trade yesterday following a visit to the main exchange by the government's top economic adviser during which no date was set for the removal of a floor propping up the index.
Dealers said investors were also awaiting some resolution of the question over International Monetary Fund (IMF) assistance for the ailing economy.
Pakistan faces a financing gap of $3.5 billion to $4.5 billion. The IMF said on Thursday talks with Pakistani officials in Dubai had been concluded and more discussions would be held in the next few days.
Shaukat Tarin, the prime minister's top economic adviser, told a meeting of members of the Karachi Stock Exchange it was up to the exchange's board to decide when to lift the floor that was placed on the index at 9,144 points in late August.
The main index on the Karachi Stock Exchange ended flat at 9,182.88 on turnover of 30,200 shares. The index has fallen almost 35 per cent this year.
"No amount of reassurance seems to be restoring investor confidence and until the floor is removed, there will barely be any interest," said Asad Iqbal, managing director at Esmail Iqbal Securities Ltd.
Fund
Tarin said a fund of Rs20 billion ($246 million) was being finalised to support share prices when the floor was removed.
Four state-owned companies would each invest Rs5 billion and the fund would be managed by National Investment Trust. Earlier, an exchange official had said the fund would invest in nine-state owned entities.
Dealers said investors were also wary of an interest rate increase if Pakistan entered an IMF programme.
Tarin said Pakistan would raise interest rates if it was believed necessary to do so to cut double-digit inflation.
"He essentially told the brokers that there will be pain in the coming months although the government would try to minimise it as much as possible," said Iqbal.
The rupee was quoted closing firmer at 81.35/40 compared with Thursday's close of 81.70/75 as dealers said there had been supplies of dollars from exporters. The rupee has weakened about 24.3 pecent this year.
Dealers said this week there had been some hidden inflows of dollars that kept the rupee steady and they suspected central bank intervention. The bank routinely declines to comment.
Pakistan's total foreign reserves, including those held by commercial banks, have fallen sharply from a high of $16.5 billion in October last year, to $6.92 billion on October 25, of which the central bank accounted for $3.71 billion.
The central bank's reserves represent about one-and-a-half months of import cover.
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