Rupee firms amid lack of payments
Saturday, September 27, 2008
KARACHI: The rupee ended firmer on Friday as import payments tailed off but dealers said the currency was likely to weaken in coming days on poor economic fundamentals and more payments.
Dealers said the rupee closed at 78.05/15 to the dollar compared with Thursday’s close of 78.21.30.
“There were no major payments today (Friday),” said a currency dealer. “But next week we might see the currency weaken as all payments for the month will have to be made by September 30.”
Dealers said there were payments due before the end of the month and before a holiday for the end of the fasting month of Ramazan at the beginning of October.
The rupee traded at a record low of 78.55 to the dollar on Monday. It has lost 21.07 per cent against the dollar since the beginning of the year.
Moody’s Investor Services on Tuesday downgraded the outlook for Pakistani debt to negative, and highlighted the foreign exchange market’s doubts over when funds would arrive to bolster dangerously low currency reserves.
Pakistan is struggling with inflation at more than 25 per cent and a widening current account deficit. The current account deficit widened to $2.572 billion in July and August which is equivalent to about 1.6 per cent of gross domestic product and compares with a full-year target of 6 per cent of GDP.
Data released on Thursday showed total foreign currency reserves had fallen to $8.82 billion in the week ending on September 20, down $90 million from the previous week. Dealers said there was also pressure due to security concerns following Saturday’s suicide truck bomb attack at the Marriott Hotel in Islamabad that killed at least 54 people.
Experts stress long-term policy to revive economy
By Mansoor Ahmad
LAHORE: Economic experts have urged the government to devise a long-term policy for achieving sustained economic growth instead of looking for a short-term economy bailout package from developed countries.
They say the leaders of ruling party while consuming all their energies for a temporary relief to stay afloat are delaying an economic package which is necessary for revival of the manufacturing sector.
The experts say the entrepreneurs have not let the government down by paying 20 per cent higher taxes than last year despite a decline in production. However, the government has failed to take any facilitating steps that could improve the sagging growth.
The News has learnt that many leading economists the government has engaged to evolve an economic stabilisation programme have expressed strong reservations about the credentials of some newly-appointed government functionaries. They have politely excused themselves from the economists’ panel formed by the government. It has also been found that some of those who are on board have strong differences with the way the economy should be handled.
Many economists are appalled by the way the government is handling the economy as federal Finance Minister Naveed Qamar has stayed back while President Zardari seeks an economic package from the US and the Friends of Pakistan.
Even with a large foreign exchange support from the donors, they say, the economy would continue to slide unless radical changes in economic policies are made. The rulers have not set their priorities for taking the economy out of the present mess.
Senior economist Naveed A Khan, commenting on the issue, says the government seems to have no clear plan about the economy except the hope that foreign friends of Pakistan would rescue the country as a reward for the ‘fight against terrorism’. He says the friends may provide a temporary one-time relief but the survival of the country is linked to sustained economic growth through a dedicated plan which is nowhere in sight.
Dubai-based chartered accountant Faisal Qamar says the government has not learnt any lesson from past experience. He says the country has been brought on the verge of economic collapse by a renowned former banker prime minister. Now the government is contemplating to appoint another banker as economic adviser with the rank of federal minister. “Pakistan is not a corporate entity or a financial institution.”
They say the country needs a dedicated economic expert and not a banker to steer it out of troubles. Transparency and good governance needed for fair and equitable growth is absent.
Pakistani-Canadian Certified Public Accountant Asif Ali Shahid says Pakistan should have taken steps to improve its economic credentials first before asking for foreign assistance. The foreigners, he says, would think twice before committing aid to a country where inflation is high, currency is weak, interest rates are high and exports cover less than 50 per cent of imports.
No serious effort has been made by the government to improve macroeconomic indicators, he says, adding any assistance will go down the drain if these indicators are not improved.
Source : The News