PSX haemorrhages over 1,900 points day after economy-defying trade deficit thumbnail

PSX haemorrhages over 1,900 points day after economy-defying trade deficit

The Pakistan Stock Exchange or PSX did not like the news that our trade deficit had ballooned to a record number and let its sentiment known by offloading 1,900 points by Thursday afternoon.

At 1:14pm, the index was trading at 43,433 points. This is 1,936 points or 4.27% down from Wednesday’s closing of 45,369.

Analyst Raza Jafri agreed that the panic was caused in part by news of a record trade deficit in November. Provisional numbers were announced on Wednesday that imports went up to around $8 billion in November which is almost double than imports in the same month last year.

The skyrocketing trade deficit has shaken investor confidence and they are trading with caution, Jafri explained.

The government is expected to announce the next monetary policy on December 14. Last month the country recorded 11.5% inflation, which is a 20-month high. In October, this was at 9.2%.

The analyst said it is expected that the government might increase the policy interest rate by 1% or 100 bps to in an attempt to control inflation.

Right now, the monetary police rate is 8.75% after the State Bank increased it by 150 basis points on November 19.

The prospects of an increase in the policy rate has made investors even more cautious, Jafri believed.

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