Pakistani stocks up; rupee flat

Pakistani stocks ended higher on Wednesday but in low volume as foreign investors accumulated...

Pakistani stocks ended higher on Wednesday but in low volume as foreign investors accumulated shares at lower levels but dealers said investors were still cautious amid flood worries.

According to the Karachi Stock Exchange (KSE) website,the KSE benchmark 100-share index ended 0.28 percent,or 27.11 points,higher at 9,705.11 on turnover of 49.65 million shares.

The low volumes depict the continued reluctance of investors in putting money to play as uncertainty prevails on the total damage from the floods and its impact on the economic growth,said Asad Iqbal,chief investment officer at Faysal Asset Management Ltd.

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The floods,triggered by torrential monsoon downpours,have swamped Pakistan’s Indus river basin,killing up to 1,600 people,forcing 2 million from their homes and disrupting the lives of about 20 million people,nearly 12 percent of the population.

The damage caused by the floods and the cost of recovery could bring long-term economic pain to Pakistan.

Authorities are assessing the damage but the finance ministry said it was hard to give an exact number. It said last week the floods meant the country would miss this year’s 4.5 percent gross domestic product (GDP) growth target.

Growth was 4.1 percent in the last fiscal year.

With higher transport costs and food shortages,inflation,and the public anger it could spark,is a major worry.

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The consumer price index came in at 12.34 year-on-year in July and will head higher.

Prices have been rising sharply in markets across the country,although they traditionally do in the run-up to the Muslim fasting month Ramadan.

The government has already been struggling to meet an IMF target for a fiscal deficit at 4 percent of gross domestic product this year. The flood crisis will mean more strain.

In the currency market,the rupee ended flat at 85.60/66 to the dollar,compared with Tuesday’s close of 85.60/65.

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Dealers said the rupee could come under pressure in the short-term because of higher demand for dollars for import payments.

The rupee fell to a record low of 85.80 on July 12 amid high demand for dollars from importers as well as on debt repayments.

In the money market,overnight rates were also flat at 11.50 percent,compared with Tuesday’s close of between 11.45 percent and 12.15 percent,and dealers said they were waiting for the result of the Pakistan Investment Bond auction which is due to be released later in the day.