KARACHI, Jan 19: The State Bank's dollar buying from banks fell to $884 million from banks in July-December 2003 down 70 per cent from $2.937 billion in July-December 2002.

The State Bank says in its monetary policy statement issued on Monday that a 13 per cent fall in workers' remittances in six months to December 2003 limited its dollar buying from banks.

Workers' remittances or money sent back home by overseas Pakistan fell 13.4 per cent to $1.845 billion in six months to December 2003 from $2.13 billion in a year-ago period.

The central bank says that foreign direct investment also shrunk by 48.7 per cent in the first half of this fiscal year. Figures released by it separately show that FDI during July- December 2003 fell to $277.1 million from $543.3 million in a year-ago period.

The breakup shows that FDI from the UK and the UAE plunged to $50.6 million and $32.2 million respectively during July- December 2003. In July-December 2002, Pakistan had attracted $181.3 million FDI from the UK and $105.4 million from the UAE.

Foreign direct investment from the US also slipped to $112.9 million from $132.1 million during this period. FDI inflow from Saudi Arabia recorded the sharpest fall coming down to only $1.6 million in six months to December 2003 from $22 million in a year-ago period.

The State Bank statement said that in five months to November 2003, the current account surplus also fell to $911 million from $1.961 billion in the comparable period of 2002 showing a decline of 53.5 per cent.

"The current account surplus was down due to widening services account imbalance and decline in workers' remittances which averaged $311 million per month during July-December 2003 against the monthly average of $358 million" in July-December 2002.

"The trade imbalance (customs-based) during July-December 2003 also widened by 23.4 per cent to $728 million with export showing a growth of 13.1 per cent to $5.9 billion and import growing at 14.2 per cent to $6.6 billion."

Commenting on the exchange rates, the SBP statement says that "the rupee on average continued to stand firm and showed marginal strength." It appreciated by 0.61 per cent against the US dollar since July 2003 "despite lower foreign exchange inflows with a moderate appreciation of 2.91 per cent last year."