Grim markets and trade data in Pakistan

Karachi: Pakistan's trade deficit for July-September, the first quarter of fiscal 2008/09, widened to $5.55 billion (Dh20.4 billion), compared with $3.636 billion in the same period last year, according to official data released on Friday.

The deficit widened to $2.027 billion in September from $1.25 billion a year ago, and the country appears headed toward a balance of payments crisis unless relief arrives soon.

Desperate for relief, Pakistan yesterday asked Iran to supply crude oil on a deferred payments basis.

The Karachi Stock Exchange board of directors will meet on Monday to review how long to keep an artificial floor under the share market and consider establishing an exit mechanism for foreign investors, the KSE spokesman told Reuters.

There had been expectations that the board would convene yesterday to review the floor of 9,144 points placed under the KSE 100-share index on August 28.

The floor has killed off trading interest, with investors unable to sell at prices that could attract buyers in a market that has lost almost 35 per cent in value since 2008 began.

Yesterday, the KSE-index closed flat at 9,181.35 and just 369,600 shares were transacted.

KSE members met on Friday and some called for the market to remain closed on Monday until a rescue fund was in place, as there were fears some members could default due to a liquidity crunch, sources who attended the meeting told Reuters.

The rupee closed at 78.10/20 to the dollar , unchanged from Thursday's closing. It hit a record low of 80.30 on Wednesday.

Intervention by the State Bank of Pakistan had helped the rupee recover on Wednesday, but dealers said it would remain under pressure until foreign currency inflows appeared.

Pakistan's foreign reserves rose $190 million to $8.32 billion in the week that ended on October 4, thanks largely to the arrival of a $500 million loan from the Asian Development Bank.

The central bank's share of total reserves was $4.87 billion, equivalent to barely two months import cover.

The rupee has lost 22.1 per cent so far this year but Shaukat Tarin, the newly appointed finance advisor to the prime minister, said the government expected the currency to stabilise "in the next few weeks".

Pakistan needs up to $3 billion of foreign capital inflows to arrive quickly if it is to meet upcoming debt obligations.