The Pakistan Stock Exchange’s benchmark KSE-100 index plunged over 700 points right after the opening bell on Monday, with the sharp slump being attributed to the central bank’s surprise move to hike the policy rate by 100 basis points on Friday evening.
The index was down 654 points, or 1.52 per cent, to reach 42,282.48 points at 10:02am.
Head of Research at Intermarket Securities, Raza Jafri, said the market had opened sharply negative as it factored in higher interest rates and continued uncertainty on the political front after Imran Khan’s threat to dissolve the Punjab and Khyber Pakhtunkhwa assemblies.
“Support may come in later on, as positives such as Pakistan’s intent to repay its maturing Sukuk ahead of schedule and the end to the long march, which risked street confrontation,” he added.
The SBP raised its key policy rate by 100 basis points to a 24-year high of 16pc on Friday in a decision that went against market expectations but, according to the central bank, was “aimed at ensuring that elevated inflation does not become entrenched”.
The decision reflected the SBP monetary policy committee’s (MPC) view that “inflationary pressures have proven to be stronger and more persistent than expected”, the central bank said in a statement after a committee meeting.
The move brings the SBP interest rates hikes to 625 basis points this year.
More to follow