PAKISTAN is facing serious economic challenges. Heavy power load shedding, high cost of manufacturing and skyrocketing prices of electricity and gas tariffs along with political uncertainty and deteriorating law and order have adversely affected domestic and foreign investment as well as domestic business activity.However, some of the major economic indicators of the country are depicting positive signs.
Foreign exchange reserves at $17.4 billion this week, remittances by overseas Pakistanis up by 20.3 per cent at $6.96 billion in the first eight months of 2010-11 and 25 per cent growth in exports in the same period has helped the rupee to come out of pressure amid strong reservations.
The rupee is trading in narrow ranges against dollar and other major currencies amid fluctuations since past many weeks. This week, the rupee hit five months high against US currency in the local currency market. The week commenced on a positive note in the inter-bank market as the rupee picked up five paisa and traded against the dollar atRs85.35 and Rs85.40 in the first trading session after closing previous week at Rs85.40 and Rs85.45. The upward rising trend in the rupee/dollar parity persisted on the second trading day as the rupee further gained 31 paisa on the buying counter and32 paisa on the selling counter pushing dollar to five months low at Rs85.04 and Rs85.08 on March 8.
After picking up 36 paisa against the dollar in the first two trading sessions, the rupee came under pressure on March 9 and traded at Rs85.18 and Rs85.22 after suffering 14 paisa decline. The rupee continued its downslide versus dollar in the fourth trading session when it further shed 19 paisa on the buying counter and 20 paisa on the selling counter and helped the dollar to recover some of its lost strength.
The dollar was changing hands at Rs85.37 and Rs85.42 on March 10. In the closing session, the rupee surged against the dollar and traded at Rs85.28 and Rs85.32 after picking up nine paisa for buying and 10 paisa for selling. On week over week basis, the dollar on the inter-bank market lost 12 paisa in the rupee term in the week ending March 11.
In the open market, the rupee/dollar parity traded in narrow ranges this week. Against the rupee, the dollar hit as high as Rs85.35 and Rs85.50 on the opening day of the week, up five paisa versus last week close of Rs85.40 and Rs85.55.
But in the second trading session, the rupee gave up its overnight weakness and recovered 15 paisa, changing hands against the dollar at Rs85.15 and Rs85.30 on March 8.
The rupee in the third trading session hit five months high against the dollar following 15 paisa gain on the buying counter and another 10 paisa increase on the selling counter to trade Rs85 and Rs85.20 on March 9.
After remaining firm versus dollar in the last two trading sessions, the rupee lost its overnight strength and posted 25 paisa decline in the fourth trading session which made dollar slightly expensive at Rs85.25 and Rs85.45 on March 10. It, however, recovered 5 paisa in the last trading session and closed the week on March 11 at Rs85.20 and Rs85.40 per dollar. This week, the rupee managed to gain 15 paisa against the dollar in the open market.
Versus the European single common currency, the rupee on the week’s opening day traded at Rs119.04 and Rs119.54, down 14 paisa against previous weekend’s Rs118.90 and Rs119.40. It, however, managed to rebound in the second trading session and posted 78 paisa gain against euro which traded at Rs118.26 and Rs118.76 on March 8. The rupee further posted 91 paisa gain on March 9, when euro was seen changing hands at Rs117.35 and Rs117.85.
After gaining net Rs1.55 in the first three trading sessions, the rupee slipped versus euro in the fourth trading session and shed 66 paisa at Rs118.01 and Rs118.51 on March 10. In the last trading session, the rupee managed to recover overnight losses, picking up Rs 1.02 against euro which traded at Rs116.99 and Rs117.49 on March 11. During the week in review, however, the rupee on cumulative basis posted gains of Rs1.91 versus the European single common currency.
On the international front, the euro stumbled on the week’s opening day after its recent rally against the dollar at $1.3975, down 0.1 per cent on the day. The euro remains up about 4.5 per cent against the greenback year-to-date. The dollar was nearly flat against the Japanese currency at 82.24 yen.
Sterling traded 0.2 per cent lower at $1.6247 in London trade, retreating from a session high of $1.6242. Its inability to extend gains beyond a 13-month high of $1.6344, hit last week, had lured some sterling sellers into the market.On March 8, the euro fell as low as $1.3860, extending a retreat from preceding day’s four-month peak of $1.4036. It last traded down half a percent at $1.3898.
The dollar also rose 0.5 per cent at 82.66 yen. In London, sterling fell against a rebounding US dollar as investors unwound long positions. It was down 0.3 per cent at $1.6152 with sovereign accounts steadily bidding the pound in the $1.6140/50 area.
On March 9, the euro failed to retest a recent four-year peak against the dollar. It hit a four-month high above $1.40 this week and last traded at $1.3904. It bounced off technical support in the $1.3860 area but was still off the day’s high of $1.3942. The dollar edged up 0.1 percent at 82.70 yen. The pound edged up 0.3 per cent on the day to $1.6207 in late London trade.
On March 10, the euro suffered its worst day against the dollar in a month. It fell 0.9 per cent to $1.3788, its biggest daily slide since February 10 after hitting a four-month peak of $1.4036 after European Central Bank President hinted at an interest rate rise as soon as April.
Against the yen, the dollar was up 0.3 percent to 82.93 yen after climbing to its highest since February 22. In London, sterling fell to a near two-week low against the dollar. It was down 1 percent against the dollar at $1.6044, its lowest since February 25.
At the close of the week on March 11, the yen fell broadly and slumped to a two-week low against the dollar in Tokyo trade after a major earthquake struck Japan and triggered a slide in Japanese shares. The dollar climbed to as high as around 83.29 yen, the dollar’s highest since February 22, rising from around 82.80 yen on news of the quake.
The euro rose 0.1 per cent against dollar to $1.3815. In London, sterling slipped to a three-week low of $1.5977 before recovering to trade at $1.6030, well below a one-year high of $1.6344 hit last week.