Updated at: 0245 PST, Monday, July 07, 2008
KARACHI: The value of rupee remained under persistent pressure due to rising demand of dollar, as dollar moved to record high of Rs71.05.
Political and economic doldrums and the traders’ hiking demand for dollar continued battering Pakistani rupee these days, while there seems to be no respite in sight. Importers at the onset of trading today also resorted to forward buying of dollars, which saw the rupee sinking to a new low against dollar at Rs71.05.
The demand for dollar, especially for buying oil continued soaring, while the foreign exchange reserves gradually shrank to near $11 billion from a record level of $16 billion.
Rupee value has already eroded by over 14 percent during the last six months of the year. Analysts said that the political wrangling has distracted the attention of the government from the economy, where such major problems like hyper- inflation and trade deficit were taking roots stronger and the rupee also remained under constant pressure.
I think some opportunists speculators are also playing their role in it - some months back (when Ishaq Dar showed a gloomy picture of the economy) the dollar went up to Rs 70 and later came back to Rs. 67. Lot of people might have made their fortune then.
Every sucsseive government has used this argument. But it had not worked so far.
I strongly fear losing my job in near future. May Allah save us!
The problem with Pakistani exports today is not a strong rupee/weak rupee...rather it is the country perception thanks to our own illegal dictator and his policies of last 8 years which he persued during this time and encouraged the Taliban/Jihadis to extend his illegal rule without doing any concrete effort to curb them...a bed sheet or a T shirt with "Made in Pakistan" tag does not sell in an American store anymore..
There were more than 100 buying offices in Lahore alone when the dictator took charge in 1999...Levis, JC Penny, wal Mart, Target, Polo Ralph Lauren and many many more....today not a single buying house is there...everyone has packed up from here...in Lahore more than 50 large composite knitwear units have closed down...each empoying from 1000 to 5000 workers...
Lahore hotels which used to be full with tourist and business people are totally deserted...with factories closing down...unemployment is rampant...this is the true story of economic progress under illegal dictator...
Karachiites suffered the same fate in late 80s and early 90s due to terrorist activities of a local ethnic outfit...
This seems to be a very accurate analysis. Most of these stores are now filled with Made in India, Srilanka and Bengladesh products. Few years ago, I saw clothings from Pakistan with reasonable good quality, but not any more.
^^^ thats more cause of Bangladesh products dont get import duty due to poor nation status. so the importers move from Pak to Bangladesh and similar countries cause it work out cheap for them.
All when US dollar not going great itself, this tells us where we stand in big scheme of things.
Hopefully once judges are restored, Rs. will make a comeback.
Else we will have to pay judges in Euro.
^^^ thats more cause of Bangladesh products dont get import duty due to poor nation status. so the importers move from Pak to Bangladesh and similar countries cause it work out cheap for them.
As far as cotton textiles are concerned Bangladesh can never compete with Pakistan as far as prices are concerned because they don't have raw material...also the kind of infra structure is concerned Bangladesh lags much behind...Bangladesh at 4 billion dollars textile exports is not much of a threat to Pakistan....our main problem is not the price....as our price quality ratio is much superior specially in comparision with Bangladesh inspite of duty concessions...by the way when we were discussing our cooperation with America in war against terror we could have negotiated easily some concessions for our textile industry...inspite the illegal dictator preffered to negotiate some unaudited aid for arms purchases...in any case our main problem is the country image which is hindering our textile exports..
Rupee crashes to historic low
By ERUM ZAIDI submitted 7 hours 24 minutes ago
KARACHI - The rupee hit new record low level against the US dollar by reaching at Rs 74.60 in the open market amid speculations that the rupee would shed more value against the US currency because of negative economic development and political uncertainty.
However, in the evening the dollar-rupee parity closed at Rs 73.70 rupees. Due to continued rise in demand, the dollar crossed Rs 74 mark versus the national currency in the forex market. The rupee continued to trade on a record low versus dollar in the interbank market by closing around Rs 74 in official dealings and in open market on Tuesday.
In the open market dealings, the US dollar kicked off new day’s trading at Rs 71/70, continued accumulate gains and was changing hands at Rs.73/50 at close of markets. In the kerb dealings, the American currency started off new day’s trading at Rs 71/50, continued to post gains and was trading at Rs 73/40 at close of markets on Tuesday. The exporters are holding back their export proceeds abroad with the aim to get better exchange rate as the rupee is showing vulnerability against the US dollar and other major currencies, capital market sources told The Nation.
Currency dealers said that with devaluation of Pak rupee exchange rate against the US dollar, the exporters are creating “standstill” position for export transactions at least for the next two weeks by not bringing trade related inflows into the country. They want to keep on going forward bookings of their sell-abroad proceeds to earn huge profit margins on each consignment.
However, the domestic money market is likely to gain further exchange rate momentum against the US dollar including other foreign currencies as the central bank is expected to raise policy discount rate further by 100 bps after July 20, 2008, said sources. Rising inflationary pressures coupled with growing trade and fiscal deficits, the idea of increasing interest rate is also floating in the market.
In the international market, the yen rose against the euro and the pound on speculation widening mortgage industry losses will prompt investors to pare holdings of higher-yielding assets funded with the Japanese currency.
Although, the foreign exchange reserves position of the country got improved and as on June, 27, 2008 the foreign reserve had increased to 11.28 billion dollars but in the true technical sense, the current depleting status of exchange rate seems quiet unprecedented,
The manipulators are keeping away both local and foreign investors from the money market to bring financial inflows because they are portraying instable outlook for the markets but chances of getting more profit margins in exchange rate is causing dollars-buying, said currency analyst.
The weakening trend of our exchange rate regime is much influenced by the volatile-like situation in the capital market which is being persisted on the back of flight of capital, from the local markets for the last few weeks.