Rupee hits another all-time low vs dollar

KARACHI: The repayment of International Monetary Fund’s (IMF) Stand-by Arrangement of $145.10 million loan has put pressure on the local currency against the dollar as the local currency hit a record-low level of Rs 102.90 for buying in the interbank market on Friday.

The currency dealers said in open market the local currency changed hands at Rs 103.35 for buying against the greenback on back of recent past loan payment.

Market pundits predicted the rupee to go further down within the next few weeks as demand for the dollar was increasing and the importers were requiring more dollars to pay for their orders.

Fazal Ahmad a currency expert in Houston said the average greenback value against the rupee was close to Rs 98 in December 2012 in contrast to Rs 59.09 in December 2001. Today it marks a 65 percent-plus depreciation of the rupee against the dollar.

The payment in dollar for edible oil imports usually increases in September to November on back of increase in edible oil and vanaspati ghee domestic consumption in winter, he added.

The country’s foreign exchange reserves for payment of export bills and bills on oil, commodities and major raw industrial materials’ imports are also under immense pressure as demand for dollar has increased.

The constant fall in value of the rupee was multiplying the cost of doing business, especially for those who relied on imported industrial raw materials and machinery.

Moreover, this situation was inflating the overall import bill of the country, as Pakistan was importing large quantities of oil among other items to meet its ever-growing needs.

Pakistan was relatively rich in mineral resources and held strong potential for small businesses to flourish however, the rupee’s depreciation was stagnating the growth of these sectors and the government needed to give serious thought on harnessing the untapped mineral resources in order to improve exports.

Encouraging the local industry for enhancing exports and luring foreign investment through good incentives were some of the effective tools that the government could utilise to curb the downslide of the rupee.

Impact on consumers’ life: Depreciating rupee increases the cost of imports, which has a direct bearing on inflation. Basically import of goods becomes costlier whenever rupee depreciates as it always makes an impact on peoples’ day-to-day life as they are consumers of imported products.

Cost of petroleum products’ import is also bound to go up with the fall in value of domestic currency.

Increased inflation means more expenses, which in turn has potential to impact the financial planning process.

The falling rupee also hits finances of a number of foreign countries-based students who pay more on their education after every fall in rupee value.

Falling rupee is also a way for slowdown in economic growth. If the fall of rupee continues, the foreign investment will dry up thus creating a gap between investment required for growth and the actual investment made.

High inflation has caused the rupee to reach this stage. The demand for dollar has been strong because of higher imports day by day.

On the IMF front, Pakistan has to repay $4.4 billion in the next three years ($3.3 billion in FY14, $1.3 billion in FY15 and $0.60 billion in FY16).

Overseas Pakistanis remit $1.4b in July

LAHORE: Overseas Pakistanis remitted an amount of $1,404.39 million in July 2013 of the current fiscal year (FY13-14), showing an impressive growth of 16.57 percent or $199.68 million as compared with $1,204.71 million received during the same month of the last fiscal year (FY12-13).

Remittances received from most of the countries showed growth. The inflow of remittances during July 2013 from Saudi Arabia, UAE, USA, UK, GCC countries (including Bahrain, Kuwait, Qatar and Oman) and EU countries amounted to $410.73 million, $252.41 million, $233.06 million, $221.93 million, $161.44 million and $38.59 million respectively as compared with the inflow of $349.66 million, $240.54 million, $215.30 million, $148.49 million, $140.36 million and $30.83 million respectively in July 2012. Remittances received from Norway, Switzerland, Australia, Canada, Japan and other countries during the last month amounted to $86.23 million as against $79.53million received in the same month of the last fiscal year (FY12-13).

It may be recalled that in order to provide an ownership structure in Pakistan for remittance facilitation, the government of Pakistan through State Bank of Pakistan, Ministry of Overseas Pakistanis and Ministry of Finance had launched a joint initiative called Pakistan Remittance Initiative (PRI) in April 2009. This initiative has been taken to achieve the objective of facilitating & supporting faster, cheaper, convenient and efficient flow of remittances.

 

Customs more vigilant to stop flight of foreign currency

KARACHI: After imposition of ban on import of gold by the government, the Customs officials and other agencies have become more active to keep strict vigilance on illegal import of gold and foreign currency from airports and other border check posts, in the backlash of dramatic fall of Pak rupee against dollar in the local money market.

It is pertinent to mention here that the government has taken such steps after sharp fall of the local currency during the past few days.

In this regard, the Customs Department has been directed to check passengers going abroad and do not allow them to take money along with them exceeding the limit of US $1000.

Sources told Customs Today that the price of gold will increase in few days after Eid-ul-Fitr and the US dollar will also fall against Pak rupee in near future.

They said that the department is on high alert to stop the flight of precious foreign currency from the country.

 

 

 

 

Overseas Pakistanis send $13.9b remittances in FY 2012-13

LAHORE: Overseas Pakistanis sent home a record $13.920 billion in the previous fiscal year (July 2012-June 2013), showing a growth of $733.64 million as compared with $13.187 billion a year earlier.

Remittances from Saudi Arabia, UAE, USA, UK, Gulf Cooperation Council (GCC) countries (including Bahrain, Kuwait, Qatar and Oman) and EU countries amounted to $4.105 billion, $2.750 billion, $2.186 billion, $1.946 billion, $1.608 billion and $357.37 million respectively, according to data released by the State Bank of Pakistan.

Remittances from Norway, Switzerland, Australia, Canada, Japan and other countries in July-June 2012-13 were $967.79 million against $935.36 million in the previous fiscal year (July-June 2011-12).

Pakistan receives $13.92b remittances in FY12-13

Staff Reporter

LAHORE: Overseas Pakistanis remitted an amount of US $13,920.26 million during the last fiscal year (July 2012-June 2013), showing a growth of 5.56 percent or $733.64 million more as compared with $13,186.62 million received during the same period of the last fiscal year.

According to the State Bank of Pakistan, the inflow of remittances during July 2012-June 2013 from Saudi Arabia, UAE, USA, UK, GCC countries (including Bahrain, Kuwait, Qatar and Oman) and EU countries amounted to $4,104.73 million, $2,750.17 million, $2,186.21 million, $1,946.01 million, $1,607.88 million and $357.37 million respectively as compared with the inflow of $3,687.00 million, $2,848.86 million, $2,334.47 million, $1,521.10 million, $1,495.00 million and $364.79 million respectively in July 2011-June 2012.

Remittances received from Norway, Switzerland, Australia, Canada, Japan and other countries during the last fiscal year (July 2012-June 2013) amounted to $967.79 million as against $935.36 million received in the last fiscal year (July 2011-June 2012).

The monthly average remittances for July 2012-June 2013 period comes out to $1,160.02 million as compared to $1,098.89 million during the corresponding period of the last fiscal year.

Last month (June 2013), an amount of $1,164.79 million was sent home by overseas Pakistanis, up by 4.23 percent, as compared with $1,117.52 million received in the same month of 2012.

In June 2013, the inflow of remittances from Saudi Arabia, UAE, USA, UK, GCC countries (including Bahrain, Kuwait, Qatar and Oman) and EU countries amounted to $353.18 million, $218.60 million, $179.93 million, $171.94 million, $138.18 million and $31.03 million respectively compared with the inflow of $333.68 million, $219.14 million, $206.60 million, $126.72 million, $128.12 million and $29.24 million respectively in June 2012.

Remittances received from Norway, Switzerland, Australia, Canada, Japan and other countries during June 2013 amounted to $71.93 million as against $73.98 million received in the same month (June 2012) of the last fiscal year.

Rupee remains stable after new govt set-up

SYED MOHAMMAD TAHIR

LAHORE: Though local currency rupee stabilised its value last week but the cruel fact is that newly-elected government of Pakistan Muslim League (PML-N) remained failed to provide cushion to strong it.

Earlier, it is expected that rupee might become strong enough on the back of new government set-up with clear majority for Nawaz Sharif in parliament and reforms in different departments to mitigate longstanding problems but federal budget against the wishes of masses has kept value of rupee intact if not plummeted. The rupee is still hovering just under 100 against a dollar.

Not only federal budget but there are also some other elements that became catalyst to support melting of local currency.

In six sessions of last week, the rupee remained firm since it has already been ruined against dollar in the interbank market amid quiet trading. The hope of increase in workers’ remittances ahead of Ramadan could keep dollar demand and supply in balance in the coming weeks but some facts are opposing this notion. An inside story revealed that some stalwarts of PML-N government ordered brokers to arrange million of dollars from local open market to send them Congo Republic for a special mission. The dealers and brokers lifted greenback from open market at every fluctuated rate and after achieving target, sent them to Congo Republic. This movement of collecting dollar from open market created panic in local currency world and its value could not be stopped to further melt despite the fact dollar remained sluggish in the world.

After the fall in dollar value in the world, the Indian rupee gained on the back of large dollar selling by exporters in spot and forward markets, ending a tough week that saw the currency slump to a record low as part of a broader regional market sell-off. Last week’s gains were not enough to prevent the rupee from falling 0.8 percent, its sixth consecutive weekly loss, having hit a record low of 58.98 on Tuesday. India’s large current account deficit has made the rupee particularly vulnerable, and its fall was exacerbated after foreign investors sold a net $3.8 billion in Indian debt over the past 16 sessions.

“Better than expected WPI and revised IIP, along with some expected dollar inflows, likely to see the rupee appreciate for the next two weeks or so,” said an expert. In the offshore non-deliverable forwards, the one-month contract was at 57.85, while the three-month was at 58.46.

Likewise, most emerging Asian currencies rose in last week as strong regional shares prompted short-covering. The Indonesian rupiah gained as the government said the country is preparing measures to cope with the reduction of quantitative easing. The Taiwan dollar rose on demand from foreign financial institutions, while bond inflows lifted the Thai baht.

The Philippine peso advanced after the central bank kept its policy rate and special deposit account rate steady. The South Korean won strengthened on exporters’ bids for settlements. “There is still some unwinding of long US dollar positions.

Similarly, the yen rose to its strongest levels against the US dollar and euro since the Bank of Japan embarked on an aggressive economic stimulus in April, as a slide in Japanese stocks triggered an unwinding of bets the currency would weaken. Pakistani rupee should also gain like other Asian currencies but unfortunately there are some other elements that could only stop rupee further falling and not gaining.