Expected rate hike drag KSE shares 603 points down

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Shares at the Pakistan Stock Exchange (PSX) opened the week in red, with the benchmark KSE-100 index falling below the 40,000 points mark. Analysts attributed the slump to political and economic uncertainty and an expected increase in the policy rate.

The KSE-100 index lost 602.7 points, or 1.49 per cent, to close at 39,720.75 points. It reached an intraday low of 662.7 points, or 1.67pc, around 2:08pm.

The KSE-100 index had closed 684 points down last week due to political uncertainty after Punjab Chief Minister Parvez Elahi formally advised the governor to dissolve the provincial assembly.

Khyber Pakhtunkhwa Chief Minister Mahmood Khan has also announced that a summary for the dissolution of the provincial assembly would be sent to the governor on Jan 17. He said that the country was moving towards general elections and claimed that the PTI would sweep the upcoming elections.

Meanwhile, the country’s forex situation has worsened with the State Bank of Pakistan’s (SBP) reserves falling to $4.34 billion, the lowest since February 2014.

The country has been facing a serious dollar shortage, which is resulting in restricted imports of even food and industrial raw materials. The latest position of foreign exchange reserves reflects that the country doesn’t have sufficient dollars to cover even one month of average imports.