KARACHI, Dec 7: The rupee lost 12.3 per cent value against the euro in the first five months of this fiscal year, coming down to 79.12 a euro at end-November from 70.46 at end-June 2004.
The rupee depreciated sharply against the single European currency simply because the US dollar that serves as a reference currency for determining the value of other foreign currencies in Pakistan's inter bank market weakened against the euro during this period.
For the same reason, the rupee lost 7.6 per cent value against the UK pound sterling in five months to November coming down to 113 a pound from 105.10 a pound at end-June. The local currency shed 8.6 pr cent of its value against Japanese yen also, as the yen rose to 0.5787 at end-November from 0.5327 at end-June 2004.
In July-November 2004, the US dollar depreciated by 8.8 per cent against the euro and by 5.2 per cent against pound sterling. It also lost 5.8 per cent value against Japanese Yen during this period.
Though the rupee posted huge falls in its value against the euro, pound sterling and the Japanese yen as the US dollar fell to new lows against them in five months to November 2004, the local unit itself lost 2.7 per cent value against the dollar. This happened as Pakistan's trade deficit rose five-fold to $2.5 billion in July-November 2004 from $444 million in a year-ago period.
The rupee would have fallen by a much wider margin against the dollar had the SBP not started selling greenbacks from November 1 to finance oil import payments. In fact, it had lost 5.5 per cent value against the dollar in July-October and what brought its total loss against the international currency to 2.7 per cent in July November was that it made a recovery of 2.8 per cent in November. The rupee recovered solely due to SBP dollar selling.
The big fall of the rupee against the euro has created problems for the exporters whose products sell in the European markets because European buyers are seeking price cuts. On the other hand, imports from eurozone have become quite costlier for Pakistan thus contributing to imported inflation.
As the US has so far not made any serious effort to block the free fall of its currency against the euro, the rupee also continues to lose weight against three major currencies of the world namely the euro, pound sterling and the Japanese Yen.
After the US dollar, Pakistan's external trade is denominated in these very currencies though their combined share is nearly half of the dollar's share in Pakistan's trade.
In the first week of December, the rupee further lost 1.1 per cent of its value against the euro slipping to 80 a euro in the inter bank market on Tuesday, as the mighty euro surged beyond $1.3 in the world market.
It also lost 2.47 per cent value against the UK pound sterling, in the first seven days of this month, touching an all time low of 115.79 a pound on Tuesday. Against the Japanese Yen, the local currency showed a relative stability. It fell slightly to 0.5800 a yen on December 7 from 0.5787 at end-November.
The local currency fell sharply against the euro and pound sterling in the first seven days of this month as the US dollar extended losses against them in the international market. It touched a new low of 1.3390 a euro and 1.9375 a pound on December 3, down from 1.3259 a euro and 1.9073 a pound at the end of November.
