PSX rallies on remittance boost, forex optimism

The stock market staged a robust rebound on Monday as investor confidence returned following reassuring signals from the central bank about the country’s external financing outlook.

The Pakistan Stock Exchange's (PSX) benchmark KSE-100 Index surged by 1,536.70 points, or 1.34%, to close at 116,390.03, up from the previous close of 114,853.33.

The index hit an intraday high of 116,177.18, gaining 1,640.86 points, or 1.43%, while the session’s low of 115,246.20 still reflected a gain of 392.87 points, or 0.34%.

“Equity market participants are reacting positively to the SBP governor's announcements made today: expected record remittances of US$4bn, a potential current account surplus for FY25, and SBP reserves exceeding $14 billion by June, driven by $5 billion in fresh inflows,” said Head of Research at Al Meezan Investment Amreen Soorani.

“This strengthens Pakistan's external position, particularly under the IMF program, and signals improved currency and inflation stability – factors crucial for investor confidence,” she added.

“Essentially, investors are realising that the panic wasn't worth it,” said AAH Soomro, an independent investment and economic analyst. “Though the US administration has started giving 90 days’ respite, it seems Pakistan may be a net beneficiary of recession-induced oil price declines."

"Also, domestically, an interest rate cut is around the corner after low inflation, $4 billion in remittances, and falling oil prices," he added. "Investors have little choice but to invest in equities to grow wealth compared to 10% returns on money market funds. In short, the Pakistan Stock Exchange has plenty of room, with attractive valuations, to grow.”

Investor sentiment was bolstered by encouraging comments from the State Bank of Pakistan (SBP) Governor, who projected that foreign exchange reserves could exceed $14 billion by June 2025. The improvement is expected on the back of record monthly remittances of USD 4.1 billion in March and anticipated inflows of $4–5 billion before June.

According to the SBP, Pakistan's external debt repayment obligation stands at USD 26 billion. However, around $16 billion, including $12.4 billion, is expected to be rolled over or refinanced, while USD 8 billion has already been repaid, easing immediate pressure on the external account.

The positive open follows a turbulent session on Friday when the benchmark index plunged by 1,335.88 points, or 1.15%, to close at 114,853.33 amid broader concerns over global trade tensions and domestic policy uncertainty.