Pakistan Stocks Fall, Rupee Hits Record Low on Concern About U.S. Sanctions

(Bloomberg) -- Pakistan’s stocks plunged and the rupee weakened to a record low after U.S. senators moved a bill seeking a probe into Islamabad’s alleged role in the Taliban’s takeover in Afghanistan.

The benchmark KSE-100 index plunged the most since march 2020. The rupee weakened 0.3% to close at record low 170.48 per dollar, the central bank data showed.

Investors are concerned about the probability of sanctions on Pakistan after the proposed bill in the U.S. Senate, Adnan Khan, head of international sales at Intermarket Securities Ltd., said from Karachi.

It’s not clear what likelihood the draft legislation has of becoming law. In the evenly-split Senate, no Democrats joined Republican Senator James Risch in cosponsoring the legislation. The bill would authorize sanctions on those providing support to the Taliban, including foreign governments, according to a statement from Risch. 

Regardless of the legislation’s prospects, there has long been bipartisan frustration in Washington over relations with Pakistan. Any further deterioration could hamper Prime Minister Imran Khan’s efforts to revive a suspended loan program with the International Monetary Fund. 

In a separate statement on Wednesday, Pakistan’s foreign ministry dubbed the draft U.S. legislation as “uncalled for and counterproductive” and said the proposed bill included references to Pakistan which were completely unwarranted.

It reiterated Islamabad’s long-held stance of engaging the new Taliban government in Afghanistan as an only way to achieve sustainable peace in the war-torn country.

“A coercive approach will not work,” said the statement.

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