Karachi: The KSE-100 index experienced minor fluctuations this week, ultimately gaining 72 points to close at 170,884, as ongoing geopolitical tensions between Iran and the United States simmered without escalating into direct conflict. Meanwhile, clashes between the Houthis and Saudi Arabia contributed to a surge in Brent crude prices, which peaked at $109 per barrel before settling at approximately $103 per barrel.

According to JS Global, domestic fuel prices saw a significant increase, with petrol prices rising by Rs19.99 per liter to Rs390.79, and high-speed diesel prices climbing by Rs26.88 per liter to Rs424.92. The State Bank of Pakistan maintained its policy rate at 11.5%, stating that recent macroeconomic indicators were largely consistent with the Monetary Policy Committee's forecasts. Pakistan's current account deficit showed a notable improvement, narrowing by 78% year-over-year in August 2026 to $98 million due to a lower import bill and reduced income outflows, despite weaker exports. The deficit for the first two months of fiscal year 2027 stood at $543 million, a 36% reduction year-over-year.

The large-scale manufacturing sector recorded a modest annual growth of 3% and a 9.5% increase month-over-month in July 2026. On the international front, Pakistan is seeking to extend its currency swap agreement with China, set to expire in 2027, while awaiting a response from the United States on a proposed $10 billion exchange stabilization facility. The State Bank of Pakistan's reserves reached a record $21.4 billion, bolstered by proceeds from a $3 billion Eurobond issuance.