Pakistan stocks, rupee recover as Musharraf resignsAugust 18th, 2008 - 6:39 pm ICT by IANS
Karachi, Aug 18 (DPA) Pakistan’s stock market and rupee made an immediate recovery Monday after President Pervez Musharraf announced his resignation in a televised address.The benchmark KSE-100 Index shot up 460 points, or 4.5 percent, to close at 10,719, as investors believed Musharraf’s resignation would cool off political tensions that have been clouding the country’s economy since Feb 18 parliamentary elections, in which Musharraf’s political allies were resoundingly defeated.
The country’s largest stock market in Karachi saw a 40-percent drop over the past five months amid jockeying for power by Pakistan’s political factions and uncertainty over Musharraf’s fate.
The rupee also plunged more than 18 percent against the US dollar in the same period.
“The resignation will bring an end to confrontations, thus easing the political uncertainty hanging over the market,” trader Ateeq Ahmed at Capital One Equities said.
The rupee made an immediate gain of more than one percent Monday to trade at 75/76 (buying/selling) against the dollar in the open market, compared with 76.50/77 Friday.
The inter-bank rate for the rupee was 75/75.40, compared with 76.35/76.45 Friday.
Traders said they believed political stability in a post-Musharraf era would bring billions of dollars of aid to Pakistan, which would ease pressures on dwindling foreign exchange reserves with the central State Bank of Pakistan.
The central bank has lost around $6 billion from its reserves during the past eight months as foreign investors removed their capital from the country amid mounting political instability.