The capital market witnessed a robust rally on Wednesday as political tensions eased following the Pakistan Tehreek-e-Insaf’s (PTI) announcement to suspend its three-day protest in Islamabad.
The Pakistan Stock Exchange’s (PSX) benchmark KSE-100 Index soared by 3,740.84 points, or 3.96%, rising to hit an intra-day high of 98,315.19 points, reflecting renewed investor optimism.
The rally came in response to PTI’s announcement to temporarily call off its “do-or-die” protest, which had paralysed the federal capital since November 24.
The easing of political unrest prompted a relief rally as investors, previously wary of prolonged instability, regained confidence and re-entered the market.
The banking sector emerged as the key driver of the rally, benefiting from the State Bank of Pakistan’s (SBP) removal of the Minimum Profit Rate (MPR) requirement on deposits from financial institutions, public sector enterprises, and public limited companies.
This decision, announced on Tuesday, has bolstered conventional banks by easing the burden of mandatory deposit reserves and improving profitability.
Previously, commercial banks were required to pay a minimum profit rate on all savings deposits, linked to the SBP repo rate. The removal of this requirement marks a shift in banking policy, aimed at facilitating large depositors and encouraging fair banking practices.
Additionally, the reversal of arbitrarily imposed charges on large accounts with deposits exceeding Rs1 billion has provided further relief to depositors.
The SBP’s decision aligns with its efforts to promote transparency and protect the interests of both banks and depositors.
By relaxing these requirements, the central bank aims to create a more balanced and competitive banking environment.
