KARACHI: The rapid revaluation of up to 12 per cent of the rupee has further depressed cotton demand as spinners and exporters took to the sidelines because of sudden change in the export parity.
Floor brokers said the textile industry has come under pressure because of rapid appreciation in the local currency against the US dollar, as export orders are normally booked in advance.
They added that since the spinning industry has already built upon their cotton inventory at higher prices and only around half a million bales are currently held by ginners, their competitive edge has been totally eroded.
There are reports that around 60 to 70 spinning units have already closed down as they have suffered huge losses against their export commitments made earlier at around Rs106 to a dollar.
Consequently, the entire cotton economy is under crisis and exporters are faced with a situation where they are losing on each and every export order negotiated before rise in the value of the rupee, which now stands at around Rs96 to a dollar.
The New York cotton market gave mixed trend where near-future contracts ended with fresh gains and far-off contacts closed with modest losses.
The Karachi Cotton Association (KCA) spot rates were unchanged at previous level and trading on ready counter was extremely slow.
The following deals were reported to have changed hands on ready counter: 200 bales, Rohri, at Rs6,100; 752 bales, Khanpur, at Rs6,400; 200 bales, Mailsi, at Rs6,500; 552 bales, Jahanian, at Rs6,500; and 1,000 bales, Rahimyar Khan, at Rs6,500.