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Pakistani stocks, rupee end lower; o/n rates up
Reuters - Thursday, August 12
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KARACHI, Aug 11 - Pakistani stocks fell on Wednesday as cautious investors booked profits at higher levels amid worry about the economic cost of devastating floods which the government said would hurt growth, dealers said.
The Karachi Stock Exchange benchmark 100-share index <.KSE> ended 0.17 percent, or 16.64 points, lower at 9,875.68 on turnover of 61.6 million shares.
"Investors are still concerned over rising fiscal deficit and inflation ," said Ahsan Mehanti, a director at Arif Habib Investments Ltd.
The floods meant the country would miss this year's 4.5 percent gross domestic product growth target though it was not clear by how much, a Finance Ministry official said. [ID:nSGE67909D]
Growth was 4.1 percent in the last fiscal year.
The International Monetary Fund said on Monday the floods, the worst in the area in 80 years, would cause major economic harm. [ID:nN09101524]
"This will have notable negative consequences on the government's budgetary estimates and may risk running a higher fiscal deficit than earlier estimated which in turn will lead to increased government borrowing," Muzzammil Aslam, an economist at JS Global Capital Ltd., said of the floods.
The flood crisis, which has put unpopular President Asif Ali Zardari on the defensive and improved the standing of the military which is spearheading relief efforts, has killed more than 1,600 people and left two million homeless.
In the currency market, the rupee <PKR=> ended weaker at 85.76/80 to the dollar compared with Tuesday's close of 85.68/74 to the dollar because of higher import payments.
Dealers said the rupee could come under more pressure in the short-term because of higher demand for dollars for import payments.
The rupee fell to a record low of 85.80 on July 12 amid high demand for dollars from importers as well as on debt repayments.
In the money market, overnight rates rose to 12.90 percent, compared with Tuesday's close of 11 percent after the cut-off yields rose in the treasury bill auction on Wednesday. [SBPK12]
The money market and currency market may be closed on Thursday subject to the sighting of the moon later on Wednesday which would mark the beginning of the holy month of Ramadan. (For more Reuters coverage of Pakistan, see: http://www.reuters.com/places/pakistan)
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