On Thursday, the Pakistan Stock Exchange (PSX) experienced a significant surge, with the benchmark KSE-100 index rising by 1,459.41 points, or 1.3%, to close at 113,713.17. This bullish momentum is largely attributed to optimism surrounding the ongoing discussions between Pakistan and the International Monetary Fund (IMF) for the first biannual review of the $7 billion program.
Finance Minister Muhammad Aurangzeb confirmed the discussions with the IMF had begun. He expressed confidence in Pakistan’s position, reassuring investors about the country’s economic direction. Reports suggest the IMF might agree to lower Pakistan’s tax targets. The original target of Rs12.9 trillion could be reduced to less than Rs12.5 trillion. This adjustment would account for economic slowdowns and revenue shortfalls, which have impacted the country’s fiscal performance.
Yousuf M. Farooq, Director of Research at Chase Securities, highlighted that falling oil and coal prices influenced investor sentiment. Market participants had previously expected inflation to reach 10% by June, keeping interest rates unchanged. However, the recent drop in commodity prices and multiple weeks of declining Sensitive Price Indicator (SPI) readings have changed expectations. Analysts now predict downward revisions in both inflation and interest rates.
Sana Tawfik, Head of Research at Arif Habib Limited, pointed to additional factors driving the rally. She noted the anticipation of an interest rate cut by the State Bank of Pakistan (SBP) in its upcoming March 10 meeting. Many expect a reduction of 50 basis points, which has further strengthened investor confidence. She also cited falling international oil prices and increased liquidity from institutional investors as key triggers for fresh buying.
Awais Ashraf, Director of Research at AKD Securities, emphasized another major factor: an improvement in U.S.-Pakistan relations. President Donald Trump recently thanked Pakistan for assisting in the arrest of a key suspect linked to the deaths of 13 U.S. service members. His statement acknowledged Pakistan’s role in counterterrorism efforts, reducing geopolitical uncertainty. Investors viewed this development as a positive signal for the country’s diplomatic and economic standing.
Looking ahead, market performance will depend on the outcome of the IMF review and the potential release of climate financing funds. A declining inflation trajectory, lower oil prices, and favorable trade figures have increased expectations of continued monetary easing. The PSX’s strong performance reflects growing confidence in Pakistan’s economic stability and financial outlook.
