Karachi, April 23, 2025 — Selling pressure resurfaced on the Pakistan Stock Exchange (PSX) on Wednesday, dragging the benchmark KSE-100 Index down by 882 points during intra-day trading. As of 11:40 AM, the index was trading at 117,547.94, reflecting a 0.75% decline. This drop comes on the heels of a relatively flat session on Tuesday, which saw the market trade within a narrow range without any significant directional move.
Market sentiment soured early in the day following a downgraded economic forecast from the International Monetary Fund (IMF). In its newly released World Economic Outlook (WEO) titled “A Critical Juncture Amid Policy Shifts,” the IMF revised Pakistan’s GDP growth forecast for FY2025 downward from 3% to 2.6%. This reduction in projected growth, attributed to macroeconomic instability and slow structural reforms, has added to investor uncertainty and contributed to the bearish trend in local equities.
The IMF also lowered its GDP outlook for FY2026, revising it to 3.6% from the earlier estimate of 4%, a move seen as a signal that Pakistan’s path to economic recovery could be longer and more turbulent than anticipated.
Further compounding market worries were comments from Fitch Ratings, which projected a gradual devaluation of the Pakistani Rupee (PKR). According to Krisjanis Krustins, Director of Asia Pacific Sovereign Ratings at Fitch, the rupee is expected to fall to 285 per dollar by the end of June 2025, and weaken further to 295 by the end of FY2026. Fitch’s warning was rooted in expectations of increased pressure on the current account as economic activity picks up, requiring greater imports and foreign exchange demand.
This currency outlook added further headwinds to the PSX, as currency volatility typically deters foreign investment and affects listed companies with foreign debt or raw material import dependencies.
Globally, however, markets were buoyant, creating a sharp contrast to the mood in Pakistan. Asian stock markets rallied on Wednesday, recovering from recent losses. The surge followed statements by U.S. President Donald Trump, who backtracked on earlier comments about firing Federal Reserve Chair Jerome Powell and hinted at a less aggressive trade stance towards China.
These developments lifted investor confidence globally, with Japan’s Nikkei climbing 2.3% and South Korea’s KOSPI index gaining 1.2%. The MSCI Asia-Pacific Index (excluding Japan) added 0.3%, reflecting broader optimism. U.S. futures also rallied, with the S&P 500 futures up by 1.8% and Nasdaq futures by 2%, supported by earnings optimism and a 5% post-market rebound by Tesla, despite underwhelming financial results.
While international markets found relief in the shifting geopolitical rhetoric, Pakistani equities continued to grapple with local macroeconomic challenges, including rising inflation, IMF-linked austerity measures, and a persistently high-interest rate environment.
Investor sentiment at the PSX remains fragile, and unless there is greater policy clarity or stabilization in external indicators, further volatility may persist in the short term. Traders and institutional investors are expected to adopt a cautious stance, awaiting more signals on fiscal policy direction, exchange rate management, and upcoming corporate earnings.