Pakistan : Terrorist Wahabi Islamic Rep Pakistan 7

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[url="http://www.dailytimes.com.pk/default.asp?page=2012/06/17/story_17-6-2012_pg5_6"][center][size="6"][color="#006400"]Dollar likely to devastate rupee by hitting[/color]



[color="#FF0000"]Rs 98 by June 30[/color][/size][/center][/url]



KARACHI: The dollar is likely to make history by hitting the highest level of Rs 98 against the rupee by the end of the current month (June 30, 2012). The reason behind the fall in the rupee’s value is said to be pressure from international currencies and persistent local demand of the dollar.



However, market experts were of the view that this downward trend in the local currency is because of higher interest payment to the International Monetary Fund (IMF), weak economy of the country and widening trade gap.



In the last one week, the rupee had soared up to Rs 96.50 verses the dollar, but slowly returned to its position and stood at Rs 95.96 in the open market.



“The dollar is in demand in the open currency market,” a dealer of a local currency exchange said. “General people and dealers’ demand for the dollar has increased.”



In the interbank market, the dollar is being traded at Rs 94.20 for selling and Rs 94 for buying.



A banker said, “Most of the oil companies are demanding the dollar to pay back their debt and new purchase agreement. The rupee may depreciate because of the huge payments of oil companies in the end of June, but now it’s covering its position in the interbank.”



In the last 11 months, the country has received an amount of $12.069 billion under the head of foreign remittances, which is higher by 19.54 percent or $1,972.69 million as compared with $10.096 billion received in the same period last fiscal year.



The monthly average remittances for July to May 2012 period come out to $1.097 billion as compared with $917.86 million during the corresponding period of last fiscal year, registering an increase of 19.54 percent, the State Bank of Pakistan’s (SBP) figures said.



According to the SBP policy statement issued last week, the central bank said, “The problems in the eurozone have increased uncertainty in the global economy and being a safe haven for investors, the dollar has strengthened significantly in the past few weeks against almost all currencies, especially the euro, and rupee.”



The current account deficit was $3.4 billion during the first 10 months of fiscal year 2011-12. After incorporating the estimated deficit for the remaining two months, it is likely to remain around 1.7 percent of the gross domestic product (GDP) for fiscal year 2012, which is not large for a developing country like Pakistan.



The net flows in the capital and financial account, on the other hand, were only $1.4 billion during the same period. Accounting for repayments of the IMF loans during the year, SBP’s net liquid foreign exchange reserves have declined to $11.3 billion by end of May 2012 as against $14.8 billion at end of June 2011.



For fiscal year 2012-13, the size of the external current account deficit as percentage of GDP is projected to be approximately the same as in fiscal year 2011-12. However, due to anticipated rise in debt payments in fiscal year 2012-13, the economy would need substantial external inflows to preserve our foreign exchange reserves, the SBP said in its policy statement.



Appreciation of the dollar in the international market is probably because of the easing crude oil prices from a peak of $130 per barrel (Saudi Arabian Light) on April 3, 2012 to $97 per barrel on June 1, 2012.



Given that almost one third of Pakistan’s total import bill is due to oil payments, this would be a positive development, the SBP said adding, with the current quantum of petroleum products and crude imports at 21 million metric tonnes, a decline of $5 per barrel in international oil prices could save up to $700 million in import payments in fiscal year 2012-13.



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