Pakistani currency, stock markets hit as budget fails to restore investor confidence

ISLAMABAD: The Pakistani Rupee (PKR) and equity markets lost further ground on Monday as the coalition government’s first budget for the next fiscal year 2022-23 failed to restore investor confidence, contrary to market expectations.

The local currency broke above the critical 204 threshold against the US dollar in the interbank market during intraday trading, while the benchmark KSE-100 of the Pakistan Stock Exchange (PSX) plunged nearly 800 points, reported Geo News.

“Sentiment is negative in all capital markets today,” said capital markets expert Saad Ali.

The expert said the federal budget for the next fiscal year was seen as a “major milestone” in reviving the stalled International Monetary Fund (IMF) $6 billion program, Geo News reported.

However, Ali said the markets believe the federal budget is “insufficient” and the Fund may not accept the budget.

“In line with Finance Minister Miftah Ismail’s statement over the weekend, market participants expect the government to revise its proposed allocations and targets set in the federal budget in order to convince the IMF.” , he added.

Ali added that the federal budget has further jeopardized the revival of the IMF’s long-awaited program.

He argued that more clarity is needed because for now the feeling is that the government will have to do more.

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