20000221

10 paisa decline

in kerb amid

improved activity

SEEMA SHAFI

KARACHI: Slight improvement in the value of the dollar, made the rupee to surrender its month-long stability against the dollar in kerb last week.

The rupee shed 10 paisa in kerb in relation to the dollar at Rs 54.32 and Rs 54.36 for buying and selling, while it did not show any change in its inter-bank rates at Rs 51.88 and Rs 51.89 amid modest activity.

The rupee lost its stability in kerb due to the dollar's upward trend versus the European currencies in the international markets. The US currency also rose versus the yen as the Federal Reserve Chairman Alan Greenspan hinted at an increase in interest rates to curb the red-hot American economy. A dealer at the local currency market said that it could create a further disparity in rates between the United States and Japan.

In addition, the rupee came under pressure following the news that the government has increased furnace oil price by 15 percent. The increase came in the wake of rising international oil prices, which have climbed abov 30 dollar a barrel to their highest since January 1991 when Iraq invaded Kuwait.

Money changers also observed that most of the investors were buying the greenback speculating that the US currency would be firmer in the world markets.

Commenting on the vulnerability of the rupee in the prevailing conditions, experts were of the view that due to weak economic scenario, the rupee has failed to maintain its month-long credibility on the news that the remittances from the overseas Pakistanis have shown a negative trend.

During the last ten years, owing to the abrupt advent of the new governments, which introduced new policies to suit their programme, the local currency remained unstable. There is an old adage " Her-Ke-Amad-Imarat-e-Nau Saakht.

On the other hand, reports that direct foreign investment in the country depicted a declining trend and the export earnings not increaseing as desired by the government, were also disappointing factors behind the volatility of the local currency.

To European Union countries, where bulk of our exports go, have weak currencies, provide little gain to the Pak exporters and sluggish foreign exchange reserves for the country.

However, leading currency dealer Ovais Kalia was confident that the rupee would recover its ground in the coming days as the government has committed to keep the rupee in the band of Rs 54.30 and Rs 54.40 in kerb.

KERB MARKET: On Monday, the rupee gaied two paisa against the dollar at Rs 54.22 and Rs 54.26 for buying and selling, respectively. On Tuesday, the rupee extended its overnight appreciation and picked up two paisa more in reation the US currency at Rs 54.20 and Rs 54.25 in modest business.

On Wednesday, it shruged off its firmness and faced a decline of eight paisa for buying at Rs 54.28 and seven paisa for selling at Rs 54.32. On Thrusday, the rupee continued its slide and dropped 12 paisa further for buying at Rs 54.32 and 11 paisa on selling side at Rs 54.36 to depict a fall of 20 paisa just in two days trading. On Friday, the rupee shed one paisa for buying at Rs 54.33 while it sustained its overnight level for selling at Rs 54.35 amid thin activity. At the weekend, the rupee gained one paisa for buying at Rs 54.32, while it remained unchanged for selling at Rs 54.36.

INTER-BANK RATES: On February 14, the rupee showed no change in its overnight levels versus the dollar at Rs 51.88 and Rs 51.89 for buying and selling respectively. On February 15, the rupee shed one paisa at Rs 51.89 and Rs 51.90.

On February 16, the local currency dropped one paisa for buying at Rs 51.90 while it maintained its selling rate at the overnight level amid modest business. On February 17 and 18, the rupee did not any change in its overnight levels versus the dollar. On February 19, the rupee picked up one paisa for buying and selling at Rs 51.88 and Rs 51.89.