Federal Reserve cuts interest rates to near zero to support US economy amid coronavirus pandemic impact
Pakistan's fragile economy has started to feel the repercussions of the coronavirus pandemic which has led to a general disruption of lives and lockdowns in many cities.
On Wednesday, the Pakistani rupee lost 3.5 rupees to reach 162.5 rupees against the USD in the interbank market while the Karachi Stock Exchange 100-index plunged further to close at 11,833, losing 693 points or 5.53 per cent for the day.
Pakistan has so far recorded 1,020 cases of Coronavirus in different parts of the country with a death toll of seven.
The Sindh province has had the highest number of positive cases at 413 with the Punjab province recording 312 cases.
The effects of the global crisis brought on by the pandemic was clearly visible in Pakistan's business market when the dollar rate rose by 2.22 in terms of percentage compared to the previous day's closing of 159 rupees.
The slump in the currency market came even as the State Bank of Pakistan, in an emergency meeting, lowered its key rate by another 150 basis points in the wake of rising coronavirus cases and business disruptions caused.
Since the Monetary Policy Committee meeting on March 17, interest rates have been cut by a total of 225 bps over two rounds.
Ahmed Salahuddin, a former official of the Exchange Companies Association of Pakistan, said that Wednesday had seen more investors including foreigners offload their holdings in the market treasury bills to seek the safety of dollars.
"This obviously increased the demand for the USD in the market," he said.
Pakistan's currency market has been volatile since earlier this month when it fell by 3.65 rupees in a single day.
Over the past two weeks, the USD has jumped by 8.25 (or 5.35 per cent) to 162.5 rupees, compared to 154.25.
The scenario in the share market also continued to be gloomy as the benchmark KSE-100 index closed at 1,336 points or 4.68 per cent in the red, as Pakistan grapples with the repercussions of the coronavirus outbreak that has brought economic activity to an almost standstill in the country.
The day saw trading halted again in the stock exchange just an hour after the opening bell as the KSE-100 tanked over 4 per cent 1,270 points to reach 27,294. Meanwhile, the KSE-30 index shed 5.33 per cent to reach 11,859 by 12:19 PM, when trading was brought to a halt.
(This story has not been edited by Business Standard staff and is auto-generated from a syndicated feed.)