Shares at the Pakistan Stock Exchange (PSX) continued their bull run on Friday on expectations that the government and the International Monetary Fund (IMF) would reach an agreement soon, helping the cash-starved country avert default.

These expectations had also led to the local currency, which has taken a severe beating in the past few weeks, recovering in the interbank market.

The benchmark KSE-100 index closed at 41,337.00 points, up 666.12 points, or 1.64 per cent.

“The market is showing strong resilience, with investors recognising that the sharp increase in interest rates does move Pakistan closer to resuming the IMF programme which is of paramount importance,” said Intermarket Security’s Head of Equity Raza Jafri.

He added that there was still a lack of visibility over 2H 2023 though, which, according to Jafri, may keep the bounce in check.

Aba Ali Habib Securities’ Head of Research Salman Naqvi noted that the PSX witnessed a bullish sentiment today.

“The interest rates were increased 3pc yesterday and it benefits banks the most, while cash-rich companies come next to reap benefits.”

Likewise, Exploration and Production (E&D) sector contains shares from Pakistan Petroleum and OGDC which are cash-rich companies, witnessed a visible uptick in shares, he added.

He went on to say that the appreciation of the dollar also benefited the technology sector. “These sectors [always] have a good weightage on the index.”

Naqvi, however, pointed out that the IMF deal was yet to be finalised, saying it was hoped that the market would close on a good note.

Pakistan is in the midst of a severe economic crisis, with its reserves depleting to just over $3 billion, enough to cover only three weeks of imports. In such a situation, the country urgently needs to sign a deal with the IMF that would not only release $1.2bn but also unlock funding from friendly countries and other multilateral lenders.

On Thursday, sources told Dawn that policy actions stood completed after the exchange rate was allowed to move freely with a massive Rs25 per dollar depreciation in two days, an unusual 300-basis-point surge in State Bank’s policy, and the government’s announcement of continuing with an almost 10pc increase in power rates on a permanent basis through a special surcharge.

Earlier, Finance Minister Ishaq Dar said that “our negotiations with IMF are about to conclude and we expect to sign a staff-level agreement with IMF by next week”, and that “anti-Pakistan elements” were spreading malicious rumours that Pakistan might default.