KARACHI, Dec 27: Pakistani importers importing goods from the eurozone are feeling the pinch of the rising euro and are looking towards new markets.

“The rising euro has led many importers to stop opening euro- denominated letters of credit,” said chairman of Pakistan Commodity Importers Association Raees Ashraf Tarmohammad. “Where they cannot convince their suppliers to price their goods in dollar and not in euro they are switching places, importing from elsewhere,” he said.

The rupee has lost about six per cent of its value against the single European currency so far during this month. It fell from 67.58 a euro on November 25 — the last working day of that month to 71.60 on December 27 in the inter-bank market. The euro made such a big gain in less than a month against the rupee mirroring its historical stride against the US dollar the world over. In Pakistan—like in many other countries — the dollar serves as a reference to work out the value of the euro and other currencies.

The euro shot up to $1.2470 in New York a couple of days ago — up substantially form its December 1 level of $1.1956.

Pakistan imports a number of capital and consumer goods from 12 eurozone countries ranging from textile machinery and chemicals to powdered milk to medicines and cosmetics, etc.

Imports from eurozone have been on the rise for the last two years as textile companies imported more plants and machinery for setting up new production units or modernizing the existing ones.

That is why euro-denominated imports doubled from 3.5 per cent of total imports in fiscal year 2000/01 to 7 per cent in 2001/02 and to 9 per cent in 2002/03. But importers say this trend looks set to change. “In this fiscal year you will see euro-denominated imports static or even falling due to rising euro,” said Sardar Muhammad Ashraf Khan. Mr. Khan who heads Pakistan Polypropylene Woven Sacks Manufacturers Association said “people who used to import from the eurozone are now switching over to Korea and Taiwan—and even China and India.”

Since the start of this fiscal year in July the rupee has lost 8.4 per cent of its value against the single European currency that has sent shivers among the importing community.

But the depreciation of the rupee against the euro is not the only reason for the importers to switch over from eurozone to other countries. “China has emerged as a competitive supplier of both capital and consumer goods,” says Sardar Muhammad Ashraf Khan. He says that with signs of improving political relations between India and Pakistan “importers also appear keen to import more from the neighbouring country.” Lately Pakistan has imported a small quantity of cotton from India as its own crop fell short of target.

Both Mr Raees Ashraf Tarmohammad and Sardar Muhammad Ashraf Khan said that imports from eurozone had picked up when the EU had given greater access to Pakistani textile exporters in post 9/11 situation. They said that the exporters who made increased exports to eurozone established new business contacts in the process that led them to import textile machinery from eurozone countries. In eurozone Germany has been a traditional supplier of textile machinery.

Majority of textile companies have finished additional imports of textile machinery ahead of quote free regime of 2005 onwards. This also is bound to lower euro-denominated imports of Pakistan.