KARACHI, Sept 21: Exporters have resorted to heavy discounting of export bills after witnessing a 1.4 per cent fall in the value of the US dollar so far this fiscal year.

Senior bankers say the exporters are discounting export bills of up to six months obviously least worried about the health of the local currency. “Everyday exporters queue up for discounting export bills worth millions of dollars,” says treasurer of a big local bank. “The exporters are out to make heavy discounting of bills for the obvious reason that they do not foresee a decline in the rupee value.”

In the inter-bank market the rupee gained 7.6 per cent against the US dollar in past one year mainly due to excessive supply of foreign exchange in the wake of 9/11. In fiscal year July/June 2001-02 it gained 6.25 per cent and in July-September so far it has put on an extra weight of 1.45 per cent.

But despite this much gain in its value the local currency is still undervalued. Rather it has been kept so by the State Bank to save exporters from experiencing a big fall in their earnings.

Time and again the finance minister has said publicly that the dollar could fall to Rs55 if the State Bank does not support it by mopping up its excess supply in the inter-bank market. Such statements have made the exporters believe that there is little chance of the dollar shooting up or rupee falling down in near future. This explains the unprecedented pick up in discounting of export bills. Discounting of export bills means borrowing in the local currency against export bills by making forward sales of the bills.

Many exporters admit that the pace of discounting of export bills has picked up but they say it is not only for the reason that they foresee a stable rupee in future.

They believe that discounting of bills has rather become a source of raising cheap money from banks.

“In order to penetrate deeper into the American and all other markets we are exporting goods on credit,” says a local exporter Asif Aziz who is also the co-chairman of taxation committee of KCCI. “So when we foresee that the dollar is going to go down we are naturally tempted to go for higher discounting of the export bills.” But Aziz makes it a point that apart from the projected rupee stability what else encourage exporters for discounting of export bills of longer tenures is their need to raise liquidity at relatively cheap rates.

At present most of the banks are discounting one-month export bills at Rs58.90 a dollar; three-month bills at Rs58.60 a dollar and six-month bills at Rs58.20 a dollar. Whereas the spot rate of the US dollar is around Rs59.20.

But despite the fact that the exporters do have interest rate advantage in discounting export bills — and that the discounting seems feasible so far the rupee is strong — some exporters just do not want to take big risks. “I cannot discount export bills of over 90 days,” chairman of Pakistan Bedwear Exporters Association Shabbir Ahmed says decidedly. “There could be a hundred things that can affect the exchange rates in the times to come. So I don’t think it is prudent to discount export bills of over three months,” Ahmed says adding that discounting of export bills of longer terms may sometime contain an element of speculation also.

He says that as the imports have started picking up and the one-time gains of 9/11 are going to be over the demand for the dollar may rise. In saying so he implies that discounting export bills of longer period is not very prudent.