Muhammad Fawad Khan, financial expert from BMA Capital Management Ltd, stated the government's much-awaited decision to seek International Monetary Fund assistance was a step in the right direction and accordingly set the stage for a much-needed fix of Pakistan's external account.
SBP spokesman Abid Qamar told Reuters "the market is aware about the overall macroeconomic conditions and based on those conditions, they are having their own expectations about the exchange rate, so that is driving (the rupee valuations) now".
Again, the challenges that have confronted three major economies in Africa that is; Nigeria, South Africa and Angola, have impacted the region's growth which has also affected overall global growth.
Still, the fund highlighted a number of markets where valuations are getting stretched, most notably in the American stock market.
Output could fall by more than 1.6 per cent in China and over 0.9 per cent in the United States next year, according to the IMF's models.
A bull run has taken USA equities to record highs this year.
"While foreign investors play a critical role in financial deepening in emerging market economies, excessively high levels of participation may increase the sensitivity of emerging asset markets to external shocks", the report said.
But markets have been on edge of late.
WALL STREET: Banks advanced and technology companies sank for the third day in a row on Monday.
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The US-based organisation said that a "no-deal" departure from the European Union could lead to fragmentation in European money markets, meaning that finance cannot flow around the system so efficiently.
Central banks are starting to withdraw the stimulus that was put in place at the time of the financial crisis. The Turkish lira plunged as investors questioned the ability of Recep Erdogan's administration to contain inflation.
The currency plunged amid fears of IMF's painful structural reforms.
.The IMF said there was a "risk of contagion" as investors became increasingly nervous about the strength of emerging markets, with the risk of capital flows towards the USA accelerating. "In adverse scenarios, that can be an abrupt reversal of flows". "We know that risky behavior and unsustainable debt is a recipe for financial crisis".
In Europe, the political situation in Italy continues to weigh on sentiment, as the new populist coalition heads into a row with the European Union over its plans to increase spending, adding to its already massive debt pile of some 130% of GDP.
Other threats to trade, such as a disorderly Brexit, could also "adversely affect market sentiment", the International Monetary Fund argued.
"Global financial conditions are expected to tighten as monetary policy normalizes; the trade measures implemented since April will weigh on activity in 2019 and beyond; United States fiscal policy will subtract momentum starting in 2020; and China will slow, reflecting weaker credit growth and rising trade barriers", the report said.
This story has been published from a wire agency feed without modifications to the text.
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