Rupee halts losing streak, gains 0.14%

Rupee halts losing streak, gains 0.14%

KARACHI: The bears maintained a firm grip over the Pakistan Stock Exchange on Friday, in line with the performance during the last few sessions, as International Monetary Fund (IMF) concerns fuelled selling pressure across the board ahead of futures rollover week.
Rupee lost nearly 3% in the last four sessions since Monday.
Analyst says market is reacting to uncertainties regarding IMF programme, depleting reserves.
Rupee has depreciated by Rs29.16 since July 1, 2021.
KARACHI: The Pakistani rupee reversed the falling trend on Friday, selling at 186.70 against the US dollar in the interbank market halting the slide that has seen it lose nearly 3% since Monday.

On Friday, the local currency recorded a minimal rise of 0.14% against the US dollar due to the anticipation of the resumption of the International Monetary Fund (IMF) programme.
The benchmark KSE-100 index maintained the downtrend due to uncertainty regarding talks between IMF and Pakistan for the seventh review of the $6 billion programme.

Moreover, the depreciation of the Pakistani rupee against the US dollar also took a toll on the market activity.

In the morning, the market opened upwards and rose in earlier trading. Some stability emerged at midday, but it could not be sustained. Late session selling dragged the market further into the negative territory.

At the close, the KSE-100 index lost 99.60 points, or 0.22%, to settle at 45,553.02 points.

Benchmark KSE-100 index intra-day trading curve. — PSX data portal
Benchmark KSE-100 index intra-day trading curve. — PSX data portal
Arif Habib Limited in its post-market commentary noted a range-bound secession was observed at PSX today due to further devaluation of Pakistani rupee against the US dollars and concerns over spike in T-Bill yields.

The market opened in the green zone but failed to sustain the positive trend as profit selling was witnessed in the main board. The secession remained dull although third-tier stocks continued their positive momentum.

Sectors contributing to the performance included miscellaneous (-66.8 points), chemical (-30.5 points), fertiliser (-25.9 points), banks (-24.8 points) and power (-21.2 points).

Shares of 316 companies were traded during the session. At the close of trading, 162 scrips closed in the green, 132 in the red, and 22 remained unchanged.

Overall trading volumes rose to 217.56 million shares compared with Tuesday’s tally of 186.43 million. The value of shares traded during the day was Rs5.29 billion.

Cynergico PK Limited was the volume leader with 23.64 million shares traded, losing Rs0.16 to close at Rs6.66. It was followed by Hum Network Limited with 23.60 million shares traded, gaining Rs8.21 to close at Rs19.59 and Lotte Chemical Pakistan with 19.59 million shares traded, losing Rs0.77 to close at Rs19.01.

Earlier, speaking to, Alpha Beta Core CEO Khurram Schehzad had said: “The market is reacting to the uncertainties regarding rollover of $2.4 billion in debt from China, IMF programme and depleting reserves.”

Regarding the depreciation, he revealed that currently, Pakistan’s reserves are not even sufficient for two months, “and rupee depreciates when the investors and traders speculate widening gap between the demand and supply of the US currency.”

The rupee has maintained a downward trend for the last 12 months. It has lost 22.61% (or Rs34.43) to date, compared to the record high of Rs152.27 recorded in May 2021.

With a fresh rise of 0.14%, the Pakistani rupee has depreciated by 18.5% (or Rs29.16) since the start of the current fiscal year on July 1, 2021, data released by the central bank revealed.

It is worth mentioning that the high demand for the greenback because of import payments, particularly oil, the dwindling forex reserves and the ambiguity about the IMF loan programme have eroded investors’ confidence, driving the rupee down.

Moreover, the market is apprehensive about the lack of foreign inflows and the rupee is likely to remain under pressure until the reserves are built up and steps are taken to tackle the balance of payments and fiscal deficit.

Going forward, the currency market is also eagerly keeping an eye on the balance of payments data for a further clue on the rupee’s future direction.

Traders also keeping a close eys on the outcome of the IMF-Pakistan negotiations, which will continue till April 24 for which Finance Minister Miftah Ismail and SBP Governor Reza Baqir have reached Washington.
A report from AHL predicted: “The market is expected to be range-bound in the upcoming week. Moreover, the new government is in talks with IMF for the revival of the programme.”

“Any breakthrough on the IMF front is likely to generate activity in the market,” it said, adding that keeping in view the ongoing result season, certain sectors and scrips are expected to stay in the limelight.

“The KSE-100 is currently trading at a PER of 4.9x (2022) compared to the Asia-Pacific regional average of 12.8x while offering a dividend yield of 8.5% versus 2.7% offered by the region,” the brokerage house stated.

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