Pakistan's Rupee Has Biggest Weekly Gain in More Than Six Years

By Anil Varma

Feb. 22 (Bloomberg) -- Pakistan's rupee had the biggest weekly gain in more than six years after the opposition parties that won the most seats in this week's national elections decided to form a coalition government.
The currency snapped a four-week losing streak on speculation overseas investors will return to the local financial market amid easing concern about political instability. The nation's benchmark equity index rose to a record yesterday, after recouping all its losses since the Dec. 27 assassination of former Prime Minister Benazir Bhutto.
``Investors clearly liked the election result,'' said Callum Henderson, head of foreign exchange strategy at Standard Chartered Bank in Singapore. ``Investors appear to be coming back, encouraged by the relatively low poll violence and the seemingly smooth political transition.''
The rupee gained 1.8 percent to 61.965 per dollar this week in Karachi, according to data compiled by Bloomberg. That is the most in a week since October 2001.
Former Prime Minister Nawaz Sharif and Pakistan Peoples Party leader Asif Ali Zardari said they will form a government, setting aside decades of political rivalry to challenge President Pervez Musharraf. Sharif said they intend to complete a full five-year term.
The Karachi Stock Exchange 100 Index closed at a record 14,971.94 yesterday, after rising above 15,000 level for the first time. The index fell 0.02 percent today.
``Political uncertainty has been reduced, allowing investors to focus on economic prospects,'' Standard Chartered's Henderson said. ``The outlook is for strong growth in the medium term.''
The former government predicted that Pakistan's $146 billion economy will expand 7.2 percent in the fiscal year through June, compared with 7 percent in the previous 12 months. The nation is targeting annual growth of as much as 7.5 percent in the next five years.