June 26, 2002	Wednesday	Rabi-us-Sani 14, 1423

KARACHI, June 25: The euro — the single currency of 12 European nations — has risen by 12 per cent against the rupee in the inter- bank market in less than three months.

The euro closed at Rs58.70 in the inter-bank market on June 25 up from Rs52.40 at the end of March. Senior bankers say the rise of the euro against the rupee was reflective of its upward march against the US dollar in the international market. “But the people are not making big investment in euros though many of them are getting worried about the fall of the dollar,” said treasurer of a leading foreign bank. “Lately we have seen some growth in the foreign currency deposits but that is not due to any major investment in euro.”

Treasurers of some other foreign and local banks reached by Dawn said they too had not seen fresh investment being made in euros nor had they witnessed any major switchover of the dollar- based deposits into euros. “People are just making inquiries about euro...they are showing some increased interest in the new currency after its phenomenal rise against the dollar but they are not really keen on investing in it,” said treasurer of a big local bank.

Exporters say the rise of the euro (or the depreciation of the rupee against it) has provided a big incentives to exports of non -quota items to the eurozone countries. But they say that the rising euro would also make the imports from the eurozone dearer thus offsetting partly the benefit the exporters may get out of it.

Whereas bankers say people holding foreign currency deposits are not much enthusiastic about euro, some leading money changers say the single European currency is gradually becoming investors favourite in the kerb market. “Lately people have started taking interest in euro...and some of them have even started switching over from dollar to euro for making money,” says Anwar Jamal of Galaxy International—a leading money brokerage.

As in the inter-bank market the euro also rose by 12 per cent in the kerb market in a little less than three months. It went up from Rs52.80 at end-March to Rs59.10 on June 25. Leading money changers attribute this to higher demand for euro by the people travelling out of Pakistan into any of the 12 euro countries.

Leading money changers say the euro hardly has a 5-10 per cent share in Pakistan’s kerb market where an estimated $5 million change hands everyday. “Lack of physical availability of euro has limited its scope as a source of investment,” says president of Forex Association of Pakistan, Malik Bostan.

He says people coming from eurozone to visit Pakistan are the only major source of euro inflows in the market adding that once the supply improves the single currency of 12 European nations may become a favourite with the local investors. But he too admits that some people have started offloading dollars to buy euro which currency analysts say may soon become at par with the dollar in the international market.