KSE-100 Index fell 1134 points today to close at 40,879 points. Its market capitalization had decreased $8 billion in last two months or 6000 points.
KARACHI: After the first session of the budget 2022-23, the US dollar has touched all-time high at Rs 204 in the interbank market while the 100-Index of Pakistan Stock Market closed down by 1134 points Monday.
In Pakistan, the greenback is free-to-float in Interbank Market after approval of a law from the National Assembly on the recommendation of the International Monetary Fund (IMF) few months ago and since that time it is not in control of central bank or the local banks.
US dollar opened at Rs 202.35 in the Interbank Market but closed at Rs 203.86 after gaining Rs 1.51 in the evening. Meanwhile the KSE-100 Index fell 1134 points today to close at 40,879 points. Its market capitalization had decreased $8 billion in last two months or 6000 points.
The government and central bank are looking towards Chinese government and IMF to support the Pakistan’s currency as it is continuously falling. The central bank reserves downed below $10 billion while commercial banks have around $5.9 billion reserves.
Saudi Arab, UAE and China has asked the country that they are ready to support Pakistan but not without the support of IMF. It means that Pakistan has to go to IMF before any support from them.
According to Bloomberg, Pakistan’s plan to trim its deficit by slashing spending may not be enough to convince the International Monetary Fund to resume its loan program, according to economists at Citigroup Inc.
The tax-to-GDP ratio is budgeted to rise to 9.2% of gross domestic product in the year starting July 1 from 8.6%, which seems low versus Pakistan’s emerging market peers and its own history, Johanna Chua and Gaurav Garg wrote in a note to clients Monday. Interest payments are estimated to consume about 44% of revenue.
“We await further fund feedback,” Chua and Garg wrote, before meetings due this month between IMF staff and Pakistani officials.
Pakistan is seeking an immediate disbursement of $900 million from the IMF, to help avert a potential default. Surging food and fuel prices have stoked Asia’s second-fastest inflation and debt repayments eroded Pakistan’s foreign-exchange reserves to below $10 billion as of June 3, or enough to cover less than two months of imports.
Pakistan needs at least $41 billion in the next 12 months, according to Finance Minister Miftah Ismail, which analysts including Saad Khan from IGI Securities Ltd. anticipate will be met but only barely.