Weekly review : Stocks climb to historic highs

Despite being a shortened two-day trading week, the Pakistan Stock Exchange (PSX) scaled a fresh peak above 78,800 points over investor enthusiasm following no increase in taxes on capital gains and dividend incomes and over hopes of striking a new loan agreement with the International Monetary Fund (IMF). The bourse snapped gains of over 2,100 points during the week as many investors were also encouraged by the Pakistani rupee stability against the US dollar and the increase in foreign exchange reserves, which stayed above $9 billion. Among other positive news, Pakistan’s current account deficit narrowed sharply in July-May 2023-24 compared to the previous year. However, the Sensitive Price Indicator, which portrays the short-term inflationary trend, rose 0.94% week-on-week and 23.78% year-on-year. In an encouraging development, Pakistan’s real effective exchange rate (REER) depreciated 3.62% to 100.7 in May 2024. This depreciation indicates improved export competitiveness of the country and a high cost of imports.