Pakistan Stock Exchange Continues Recovery Amid Rising Oil Prices

KARACHI: The Pakistan Stock Exchange (PSX) extended its recovery for the third consecutive session on Wednesday, despite elevated oil prices and a recent interest rate hike by the State Bank of Pakistan aimed at curbing inflation.

The benchmark KSE-100 index surged above 166,000 during intraday trading before profit-taking at higher levels trimmed some gains. However, it managed to close above the crucial psychological threshold of 165,000, buoyed by optimism surrounding Pakistan’s diplomatic efforts to mediate the ongoing US-Israel conflict over Iran, which escalated on February 28.

Investors are exercising caution as the conflict has begun to impact Pakistan, a nation heavily reliant on energy imports through the Strait of Hormuz. The rising oil prices, which increased by approximately 1% following an attack on a Saudi Arabian refinery, pose significant risks to macroeconomic stability, exacerbating the challenges of costly energy imports and slowing economic activity due to high input costs and a recent policy rate increase from 11.5% to 12%.

Looking ahead, market analysts suggest that investors will closely monitor developments in the Middle East and the potential implications for energy prices and economic stability in Pakistan. Further diplomatic efforts are anticipated as the government seeks to mitigate the impact of external conflicts on the domestic economy.