KARACHI, May 11: The euro has risen by 4.8 per cent and British pound sterling by 2.8 per cent against the rupee in the inter-bank market since April 1, 2002. At end-March euro was trading around Rs52.40 and on May 11 it shot up to about Rs52.95. Similarly the sterling rose to around Rs88.05 on May 11 from Rs85.60 on March 30.

Exporters say this has paved the way for an increase in export of non-quota items to 12 countries of eurozone and Great Britain. But bankers say despite the appreciation of the euro and pound, investors are still sticking to the US dollar.

“The rise of the euro and pound would have a nominal positive impact on export of non-quota items,” said a former chairman of SITE Association of Industry Majyd Aziz. “But at the same time it would make imports dearer...and hurt those textile exporters who would be importing machinery from Europe to expand manufacturing facilities.”

Bankers say despite the rise of euro and pound people still want to hold dollars. “We have not seen a big switchover of the dollar holdings into euro and pounds these days,” said treasurer of a foreign bank.

“Globally the euro and pound are not getting stronger rather the dollar is getting weaker,” he said and linked it to recent offloading of dollars by global investors after the US economy failed to show signs of recovery according to their anticipation.

Bankers also trace the reason for fall of the dollar in the international market in the past one month to the Middle East crisis that prompted many Arab investors to switch over their dollar holdings into euro and pound. But they say only time will tell whether this change in the Arab investors attitude is going to last or it is just a temporary phenomenon.

In the kerb market also the euro and British pound sterling have risen by more than 5 per cent and 2.8 per cent respectively. Whereas the euro went up from Rs52.80 at end-March to Rs55.50 for selling on May 11 the sterling jumped up from Rs86.30 to Rs88.70.

Money changers and bankers say the rise of the euro and pound in the kerb market mirror their advancement against the US dollar in global market. But they say investors are not rallying for euro and pound for the time being. “There is not much liquidity of euro and pound in our kerb market whereas dollar is always easily available for buying and selling,” said a foreign banker.

A leading money changer said euro and pound may gain further in next two months because people going to spend summer holidays in eurozone and Britain would be buying these currencies instead of dollar.

“That is why I see the demand for euro and pound building up in our kerb market,” said Ovais Kalia of Khanani & Kalia International. He said the rise of the euro seemed to be based on strong economic fundamentals of eurozone and as such the single currency of 12 European nations may gain further grounds in the days to come.

“Only then our local investors may be attracted to euro.”