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Bulls return to PSX after central bank cuts interest rate

KARACHI: The Pakistan Stock Exchange (PSX) saw a return of the bulls on Friday as the benchmark KSE-100 Index gained over 1400 points, ARY News reported.

The market opened at 10:15 am and trading was halted at the PSX after the benchmark KSE-100 index soared almost 1,500 points ( 5 percent).

This is a standard protocol for risk management purposes, which is triggered when the KSE-30 index moves 4% either way and remains there for 5 consecutive minutes.

The objective of introducing market halt is to safeguard investors and market participants during volatile markets.

Since trading resumed at 11:55 am, the market has continued to increase its gains. The benchmark index also touched the level of 33,000 points during the trading.

The KSE-100 index gained 1498 points on the last working day and closed at 32,832.

The confidence prevailed among the investors as the State Bank of Pakistan (SBP) on Thursday further slashed its key interest rate by two per cent (200 basis points) to nine per cent in wake of the worsening outlook for global and domestic economic activity due to the coronavirus pandemic.

Over the past one month, the central bank’s key interest rate has seen a cumulative reduction of 4.25 per cent.

“Since the last MPC [Monetary Policy Committee] meeting, the global and domestic outlook has further deteriorated,” a statement issued by SBP noted.

READ MORE: Rupee gains Rs3.38 against US Dollar in interbank market

“The world economy is expected to enter into the sharpest downturn since the Great Depression, contracting by as much as 3 percent in 2020, according to projections released this week by the IMF.”

“This is a much deeper recession than the 0.07 percent contraction during the global financial crisis in 2009.”

While there is exceptionally high uncertainty about the severity and duration of the Coronavirus shock, the developments discussed above imply further downward revision in the outlook for growth and inflation, the central bank said.

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