Uncertainty at PSX and SBP Policy Hike
21 Nov, 2021
On Market Front
This week, the market gained 740 points to close at 46,489 points. The market became uncertain later in the week when SBP called an early meeting of monetary policy and the government agreed to pay PKR 190bn to Independent Power Producer and kept petroleum prices unchanged for the next 14 days.
In a notice to PSX, Fauji Cement Company Limited (FCCL: +0.53%) has announced to acquire the business of Askari Cement in a swap equity deal. All the business of Askari Cement will be transferred to FCCL. Post this merger, FCCL will become the second largest cement manufacturer in the north region.
Systems Limited (SYS: -1.24%) has announced that its subsidiary company E-Processing Systems that owns OneLoad has received a strategic investment from Bill & Melinda Gates Foundation to improve the digital payments ecosystem for the bottom of pyramid.
On Economic Front
POLICY RATE HIKE
State Bank of Pakistan (SBP) called a meeting of monetary policy a week earlier and increased the policy rate by 150 basis points to 8.75%. The increased policy rate was higher than market expectations. In a statement, SBP Governor Reza Baqir explained that the reason behind the hike was to address the rising inflation and current account deficit.
TOUGH SITUATION AHEAD
The current account deficit increased by USD 1.6bn to $5.08bn for the ongoing financial year. The reason for the deficit is the growing size of imports and the situation is not in favor of the exchange rate and the balance of payment. Pakistan has yet not received USD 3bn from Saudi Arabia and the International Monetary Fund has yet to finalize the negotiations for the resumption of the loan.