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KARACHI: Pakistani stocks fell to a near four-and-a-half month low on Wednesday in light trade, with many investors cautious amid growing tensions between the government and Pakistan's powerful military, whose power struggles have broken out into the open.
On Thursday, President Asif Ali Zardari flew to Dubai on a scheduled one-day trip amid a crisis that has raised fears for the stability of Pakistan, a vital but uneasy ally for the United States in its attempt to fight militancy and bring peace to neighbouring Afghanistan.
“The market saw very low volumes and most investors remained cautious given the growing political turbulence in the country,” said Shuja Rizvi, a dealer at brokers Al-Hoqani Securities.
Relations between Pakistan's civilian government and the military have reached their lowest point since a coup in 1999, reducing the chances that the leadership can take on the country's enormous social and economic challenges.
The Karachi Stock Exchange's benchmark 100-share index ended 0.20 per cent, or 21.37 points, lower at 10,909.12 -- its lowest closing since Aug. 29. Turnover in the market was only 21.12 million shares.
“Investors are also nervous about the Supreme Court hearing on Monday and fear that the court may give a ruling that could destabilise the government,” he said.
The Supreme Court has threatened the government with contempt proceedings that could lead to the fall of senior officials, including the prime minister, if it does not take action on long-standing corruption cases against Zardari.
Zardari says the charges are false and politically motivated.
Meanwhile the rupee also fell on Thursday after rising for two days, amid a higher demand for the dollar from importers.
The rupee ended at 90.10/90.15 to the dollar, down from 89.96/90.01 a day earlier. The rupee fell to a record low of 91.28 to the dollar in intra-day trade on Monday.
“There were payments of $30-$40 million today and not many inflows, so the rupee eased a bit,” said a dealer at a foreign bank.
Dealers said the rupee is likely to remain weak in the weeks ahead. The rupee lost 4.82 per cent in 2011 after falling 1.53 per cent in 2010.
In the money market, overnight rates ended unchanged at the top level of 11.90 per cent amid tight liquidity conditions.
