Strategic trade agreement between Pakistan and the U.S. fuels optimistic market trend on PSX
In a historic move, the United States and Pakistan have signed a trade deal in July 2025, aiming to strengthen bilateral trade and investment cooperation. The agreement includes joint development of Pakistan's massive oil reserves and a commitment to lower reciprocal tariffs, particularly benefiting Pakistani exports to the U.S.
The deal, which was announced by US President Donald Trump on social media, has already shown positive effects on the Pakistani stock market. On Wednesday, the Pakistan Stock Exchange (PSX) experienced a mixed day of trading, with the benchmark KSE-100 index rising by 447.43 points, or 0.32%, reaching 138,412.25 points. This surge was followed by a 0.71% increase on Thursday, with the KSE-100 index settling at 139,390.42 level.
The trade deal is expected to intensify trade and investment flows between the two nations. In 2024, U.S.-Pakistan trade was about $7.3 billion, with Pakistani exports growing steadily. The deal aims to further boost this trade, with the U.S. set to help explore and develop largely untapped oil reserves, mostly believed to be in Balochistan province.
One of the key aspects of the deal is the joint oil development. The U.S. is in the process of selecting an oil company to lead this partnership. President Trump hinted that this partnership may eventually facilitate selling oil to India.
Another crucial aspect of the deal is the reduction of tariffs. The agreement entails reducing tariffs reciprocally, focusing especially on easing tariffs on Pakistani exports to the U.S., which is expected to enhance Pakistan's market access to the U.S. and vice versa. However, no detailed tariff schedules or specific timelines have been publicly disclosed.
The deal is also viewed as deepening bilateral ties, enhancing infrastructure investment, and fostering greater cooperation in energy development. Pakistani Prime Minister Shehbaz Sharif expressed gratitude for the deal, calling it historic.
Meanwhile, the Asian equities slipped on Thursday, with MSCI's broadest index of Asia-Pacific shares outside Japan easing 0.7%. Despite this, the Pakistani rupee maintained its upward trajectory against the US dollar, appreciating 0.03% during trading. The dollar held near a two-month high.
In the domestic market, 235 companies registered an increase, 215 recorded a fall, and 33 remained unchanged. At close, the Pakistani rupee settled at 282.87, a gain of Re0.08. The policy rate remained unchanged at 11% by the State Bank of Pakistan.
Notably, key players such as Invest Bank and Oil & Gas Development had significant volumes, with 37.15 million shares and 24.21 million shares traded respectively. B.O.Punjab was the volume leader with 82.94 million shares. The value of shares rose to Rs36.35 billion.
In conclusion, the U.S.-Pakistan trade deal focuses primarily on mutual cooperation to develop Pakistan's oil resources and reduce tariffs, thereby strengthening trade relations and economic partnership. The deal is expected to bring significant economic benefits and deeper bilateral ties between the two nations.
- The U.S.-Pakistan trade deal is anticipated to boost the trading of both nations, particularly benefiting Pakistani exports to the U.S., as the agreement aims to reduce tariffs reciprocally.
- Under the deal, the U.S. is set to help explore and develop Pakistan's oil reserves in Balochistan province, potentially opening a future avenue for selling oil to India.
- The Pakistani rupee has been maintaining its upward trajectory against the US dollar, despite a slip in Asian equities, and reached 282.87 at close, a gain of Re0.08.
- Key players in the Pakistani market, such as Invest Bank and Oil & Gas Development, had significant trading volumes, with a combined worth of Rs36.35 billion.
- The deal, which focuses primarily on oil development, tariff reduction, and infrastructure investment, is expected to bring significant economic benefits, deepening bilateral ties between the U.S. and Pakistan.
