The political uncertainty prevailing in the country is taking its toll on financial markets, with the bears refusing to relinquish control of the bourse and the rupee exploring new depths with each passing day. Apart for a brief period in the immediate wake of the change of guard in Islamabad — during which there was some positive news from the stock market and the money market — the situation is only going from bad to worse. With the ousted prime minister, Imran Khan, gearing up to march on Islamabad in his bid to force the government to announce early elections in the country , the uncertainty about the new government, led by Prime Minister Shehbaz Sharif, is only growing.
A worsening balance-of-payments crisis is equally worrisome — if not more — for the government which is knocking at every foreign door possible to earn some kind of a bailout. Unfortunately, the wait for a clear word on financial assistance from friendly countries as well as IMF — to shore up the depleting foreign exchange reserves and provide some breathing space for the new government to make do with the deteriorating economic situation — continues, adding to the concerns of the investors. Fears or a further raise in the interest rate as well as pressure in global equity markets are also among the factors keeping the investors at bay. All this has resulted in the KSE-100 index shedding a mammoth 1,447.67 points at the start of the week yesterday. Also, the dollar gained Rs1.17 yesterday to trade at Rs187.80 in the inter-bank market, with the rise attributed to payments made for imported oil.
With the markets in an urgent need of positive stimuli, our economic managers must fast-track their efforts to reach a settlement on the IMF loan programme and to convince the friendly countries to continue their financial assistance and help the new government find its feet.
Published in The Express Tribune, May 10th, 2022.