Rupee losing fast against regional currencies

[LahoreEstate]

KARACHI: Pakistani rupee is losing fast against regional currencies as it remained just half against the Indian Rupee, and the Bangladeshi Taka also appears much stronger than the Pakistani currency.



Money experts said weakening economy and terrorism are the main causes of sinking rupee which witnessed sharp devaluation even in the local economy as buying capacity of the currency eroded during a couple of years.



Money market players and experts observed that devaluation against regional currencies was a clear sign of poor performance of economy, even poorer than Bangladesh which was not considered a competitor of Pakistan in the recent past.



‘To get 100 Indian rupees, we have to pay Rs185 to Rs190,’ said a currency market player on Saturday.



Indian economy showed strength during a year when the global economy was in difficult situation because of financial meltdown in the United States and Europe which finally engulfed the entire world.



However, some experts believe that the way Pakistani currency lost its weight was not purely a global impact; instead it was more domestic than global phenomenon.



‘Severe problem of imbalances on foreign payment, fast depleting foreign exchange reserves, very high inflation and poor economic performances shattered confidence on local currency,’ said Imran Kaleem, a currency expert.



He said the local currency is so vulnerable that even households in the country are trying to save their money in other stronger currencies.



It was observed that many people keep US dollar and other currencies in their vaults.



Exchange companies told Dawn on Saturday that once again the households have started buying dollars to protect their savings from value erosion.



‘The US dollar is gaining against the local currency mainly because the demand is high,’ said Asif Ali, a currency exchange dealer.



He said most of the demand was for $1000 to $2000 which showed that it was a family saving while it also reflected the falling confidence on local currency.



Currency experts said the gulf between open and inter-bank market rates of dollar has widened and was enough to attract dollars from other than banking channels.



The rate of US dollar in the inter-bank market was Rs83.30 while it was Rs83.70-80 in the open market.



A dollar holder will obviously prefer selling its dollar in open market or bringing dollar through channels other than the banks.



However, currency dealers said it became extremely difficult to bring dollars from other than the banking channel and it was obvious from the rising volume of remittance coming through the banking channels.



Remittances increased by 24 per cent in the first quarter of the current fiscal.



‘The US is a massive economy which gives weight to its currency dollar but the Bangladeshi Takka is also gaining against Pakistani rupee which is a serious question of economic stability of our country,’ said Abid Saleem, an analyst at a brokerage house.



One hundred and twenty-five Pakistani rupees are required to get 100 Bangladeshi Takkas. The rate was noted on Saturday. Bangladesh got some good achievements in textile exports but it is not a large economy with good resources.



In fact, it depends on imported cotton to produce textile goods which earns the country foreign exchange and provides biggest number of jobs in the country.



‘Terrorism shattered the confidence of local as well as foreign investors forcing them to wait for good time while the government has so far been unable to stop frequent suicide bombings and attacks on security forces,’ said Aamir Aziz, an exporter of readymade garments.



He said foreigners lost confidence in our ability to produce and ship their demanded goods in time.



‘Every segment of economy is relative, like currency is attached with economic performance. Pakistani rupee may fall further if economy does not improve and war like situation in North of Pakistan ends,’ said Aamir.

http://www.dawn.com/wps/wcm/connect/dawn...s---il--12