KARACHI: Pakistani stocks ended lower on Monday, led by the banking sector after the State Bank of Pakistan raised the minimum deposit rate on savings accounts to 6 per cent from 5 per cent.
The decision by the central bank on Friday came at the same time it announced its monetary policy for the next two months, keeping the key policy rate flat at 12 per cent.
“This move will have a significant impact on banks’ profitability, as savings deposits account for nearly 38 per cent of all bank deposits, and 52 per cent of the total number of deposit accounts,” said Sayem Ali, economist at Standard Chartered Bank.
The Karachi Stock Exchange (KSE) benchmark 100-share index fell 0.2 per cent, or 28.72 points, to end at 13,770.70.
Volume was 261 million shares, compared with 380 million shares traded on Friday.
Among banking stocks, NIB Bank ended 4.5 per cent lower at 2.55 rupees, the National Bank of Pakistan fell 3.5 per cent to close at 46.30 rupees and Bank Al Falah closed 2.1 per cent lower at 15.75 rupees.
In the currency market, the rupee ended weaker at 90.70/75 to the dollar, compared with Friday’s close of 90.65/70.
In Friday’s monetary policy statement the central bank said the external sector is likely to remain under pressure because of both external debt payments and a lack of foreign aid.
Pakistan’s current account deficit widened to $2.95 billion in the first eight months of the 2011/12 fiscal year, compared with $194 million over the same period the previous year.
The current account deficit in February was $260 million, compared with a deficit of $98 million in February 2011. The deficit stood at $364 million in January 2012.
“We expect the fiscal year 2011/12 current account deficit to widen to $4.6bn (2 per cent of GDP), with higher debt payments adding to pressure on the rupee,” said Ali from SCB.
“We forecast that it will weaken further to 92 by June and 96 by December 2012, adding to inflation risks.”
Overnight rates in the money market rose to end between 11.75 per cent and 11.90 per cent, compared with Friday’s close of between 10.50 per cent and 11 per cent, amid tight liquidity in the interbank market.