Pakistani stocks surge to record, rupee also makes smart gains

Pakistani stocks today closed at a historic high with the Karachi Stock Exchange's benchmark 100-share index jumping 284.03 points to a record 27,176.26, amid the domestic currency appreciating to 101/101.10 against the US dollar.
Stocks gained riding on the back of sustained buying interest in bluechips by domestic fund managers, analysts say.
In the currency market, positive sentiments have led to the Pakistani rupee making big gains against the US dollar in the foreign exchange market after it had slipped to as low as 110 in November.
Last Friday, it closed at 102.85/102.95 against dollar.
The Pakistani rupee has gained a substantial 5.4 per cent over just 14 weeks.

The strong gains by the rupee have led to talk in the money market that the dollar will sell for as low as 98 rupees by the end of the fiscal year.

A senior economist at an international bank, however, believes the rupee's rally is driven more by sentiments as macroeconomic factors remain largely weak.
"Sentiments have shifted due to positive IMF staff reviews, expectations of significant aid and investment inflows in 2014, and interventions by the State Bank of Pakistan (SBP) through the forward/swap market," he said.
In the last report issued by the central bank on February 28, foreign currency reserves held by the state bank stood at USD 3.92 billion, up 1.29 per cent from the preceding week.

These reserves give an import cover for only 1.1 months.
"Importantly, oil import payments, which account for roughly 40 per cent of total imports, have now been moved out of the interbank and are instead being paid from FE25 loans," a market analyst said.
These measures have helped reduce the demand for the dollar in the interbank, thus bringing down the value of the greenback against the rupee, he added.