December 29, 2002	Sunday	Shawwal 24, 1423

KARACHI, Dec 28: Dr Ishrat Husain, Governor, State Bank of Pakistan has said that interest rate reforms would continue, which could allow strong liquidity flows to the stock markets during 2003.

The assurance, according to a KSE press statement issued on Saturday, was made by the SBP Governor to the bourse’s managing director Moin M.Fudda.

Dr.Ishrat while congratulating the exchange on its historic performance that saw the KSE-100 index touch its all-time high of 2661.38 points on December 27 on record turnover of 632 million shares, attributed the stock market performance to the Central Bank’s policy of declining interest rates and the resultant increase in liquidity.

The SBP had initiated a pro-active monetary policy earlier this year by cutting the discount rate by 100 basis points in January, followed by another 150 basis points last month. This resulted in lowering of yields on government securities and also led to a much-needed rationalization of returns on National Savings Schemes, which are now benchmarked with market rates.

“This policy stance by the SBP coupled with the de-dollarization of the economy on account of a stable currency law allowed strong liquidity flows to enter the equity markets,” the KSE said.

The SBP governor, nonetheless, pointed to the fact that currently about 25 odd companies are actively traded and he hoped that the added liquidity would serve to broaden the base of the market by generating interest in other listed companies. Also that in 2003 larger number of listings would take place that would go to further enhance value of the bourse and boost investor interest in stocks.