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Commentary

Pakistan in some deep trouble along with Iceland

Pakistan has some serious serious problems, as is hidden in an article titled “Pakistan to unfreeze stocks by October 27“:
(HT: Kaushik)

  • “The market has lost around 50 per cent of its value since May amid political instability and economic turmoil. Investors are concerned about the growing Islamic insurgency in the North West Frontier Province (NWFP), a spate of suicide bombings across the country and mounting tensions with NATO forces and the Afghan government.”
  • “Police were called on Monday to cordon off the market in order to prevent violence by angry investors and a group of aggrieved brokers.”
  • “A severe domestic liquidity crunch also sapped the appetite of domestic investors to buy back shares, leading the market interest rates on short-term borrowing to shoot up to a record average of 60 per cent.
  • “Pakistan is currently facing inflation of more than 25 per cent and a widening current account deficit of over 14 billion dollars.”
  • “The country’s currency has also depreciated by 22 per cent since January. Reserves with the central State Bank of Pakistan have been halved in six months to 8.3 billion dollars, barely enough to meet two months of imports.
  • “The rumours last week of the country’s default amid freezing of private bank accounts and lockers triggered a run on several banks.”
  • “Already the prices of Pakistan’s sovereign bonds on the London Stock Exchange has plummeted and is current trading near default levels.”

Iceland is also in deep doo-doo, with stocks dropping 77 percent after trading reopened with a week’s hiatus.

77 percent – imagine what that would do. And all they need is $5.4 billion? I keep wondering why India doesn’t give it – we don’t need them dollars anymore, crude is in the toilet!