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KARACHI: Shares declined on Monday, in line with other Asian markets after a rout in Chinese equities and a sharp drop in US dollar unnerved investors, dealers said.
The benchmark 100-share index at the Karachi Stock Exchange closed down 4.11 per cent, or 1,419.43 points, at 33,100.34.
“The main reason for the fall in the equity market was global markets and international currency pressure. Our exchange rate has also depreciated by 1.8 per cent in a single day,” said Bilal Asif, head of research at Habib Metropolitan Services.
The dollar index, which measures the greenback's performance against a basket of six major currencies, fell 2.2 per cent to its lowest in seven months as investors pushed back expectations of a rate hike by the Federal Reserve in September.
Pakistan Petroleum Ltd fell 5 per cent after its fourth-quarter profit slumped 68 per cent to Rs4.3billion, missing market expectations.
Other oil refiners also declined, with Pakistan State Oil Com Ltd and Oil and Gas Development Co Ltd losing 5 per cent each.
The rupee ended weaker at 102.48/102.53 against the dollar, compared with Friday's close of 101.98/102.03.
US dollar exchange rate in the interbank market appreciated by Rs2.10 on Monday to reach a 17-month high of Rs104.10, DawnNews reported.
The report said that dominant exporter groups are trying to create instability in the market by buying US dollars in huge quantity.
Experts are of the view that the decrease in the value of rupee under the current circumstances will cause inflation in the country.
Currency dealers, however, emphasised that Haj pilgrims were the biggest buyers of foreign currencies, including Saudi riyals and US dollars.
Since a major part of Saudi riyals are being consumed by pilgrims, less foreign currencies are available to sell in Dubai for buying and remitting dollars into the country.
The State Bank has recently allowed currency dealers to transfer dollars from Dubai directly into their accounts in Pakistan instead of surrendering dollars to a bank and then getting them within a week’s time. The step was taken on demand of currency dealers and for speedy supply of dollars in the open market.
Since the imposition of withholding tax (WHT) on banking transactions, another group of buyers appeared in the open market. Traders protesting against WHT are buying dollars, making payments through it and saving it in their bank lockers.
Overnight rates in the money market fell to 6.25 per cent from Friday close of 6.50 per cent.
