PSX surges 5.38% after Pakistan secures IMF lifeline

KARACHI: The Pakistan Stock Exchange (PSX) opened on Monday with a gain of 5.38%, or 2,231 points, in line with expectations. This was the first session following the nation’s receipt of the International Monetary Fund (IMF) lifeline over the Eid holiday. PSX benchmark reached a peak of 43,684 points at 9:31 am. However, immediately after the market opened, trading at the stock exchange was suspended for 60 minutes in order to settle large orders in accordance with the law. Following the revival of the $7 billion program that was officially ending prematurely the same day, Pakistan and the IMF last week agreed to a short-term (nine-month), $3 billion loan program.

The programme is expected to make the required foreign exchange available to reopen imports, help listed companies to gradually ramp up the partially closed production and reenergise economic activities in the country.

The new programme has signalled other donor agencies and friendly countries to extend new financing to Islamabad as they pledged $9 billion at a Geneva meeting in January 2023.

The inflows would also boost foreign exchange reserves and allow the cash-strapped country to prepare for reopening imports.

The market had remained locked in the range of 40,000-42,000 points for the past few months amid the partial closure of the domestic economy.

The critically low foreign exchange reserves at $3.5 billion had peaked at risk of default which now receded in the short to medium run amid the revival of the IMF programme.

It, however, remains to be seen whether the market will sustain the historical single-day gains in the short-run at a time when the central bank’s key policy rate stands at a record high of 22% at present.