Once bitten, twice shy: PSX wobbles amid monetary policy anticipation thumbnail

Once bitten, twice shy: PSX wobbles amid monetary policy anticipation

Pakistan Stock Exchange (PSX) shed more than 500 points Monday as investors are anticipating a 150 basis points increase in the interest rate. 

The State Bank of Pakistan (SBP) is expected to announce the interest rate hike in the monetary police announcement Tuesday. 

On Monday, the market closed on 42,876 points after shedding 519 points. At the start of the trading session, the benchmark 100 index was at 43,395 points. 

Economic analysts are saying that the expected raise in the interest rate has cautioned the investors. If there was any doubt regarding the interest rate hike, it was put to rest when the central bank increased the yield on T-bills floated December 1. 

The cut-off yield on three-month T-bills was raised to 10.39 percent and that on six-month T-bills to 11.05 percent. 

This further strengthened the notion that the central bank will increase the interest rate. 

Investors have learnt their lesson from the last monetary police announcement on November 19 when a 150 basis point hike in the interest rate shocked business community and tanked the stock market. Investors were expecting a maximum raise by 100 basis points. 

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