Rupee adds strength to economy
KARACHI, June 30: Thought most of the economic indicators went against the growth in the fiscal 2011 ended on Thursday, the local currency showed enough strength to protect the value of the economy as well as the image of the country.
While the economy did not perform and the inflation was above 14 per cent, the rupee lost just 0.5 per cent against the dollar during the fiscal 2011.[/B]
Analysts and currency experts said the rupee sent a strong message to the world minimising the weaknesses of the economy which could hardly grew by 2.4 per cent this fiscal year.
The government estimates real GDP to grow at 2.4 per cent on the back of strong performance of services sector as against actual growth of 3.8pc last year and target of 4.5pc in FY-11.
Another indictor, the agriculture growth also performed poorly as it grew by 1.2 per cent on the back of 3.7 per cent growth in the livestock sector.
However, experts expressed doubt that the local currency would be able to show similar strength in the next fiscal as many supportive indictors might see some changes.
Mohammad Imran of Arif Habib Securities said the country would not get another windfall of very high price of cotton and cotton-based products which it received during FY-11.
Currency expert and dealer in the inter-bank market Atif Ahmed said if the oil prices remained around $90 per barrel and country`s export does not show the vigour it showed in FY-11, the rupee would surely shed more weight against the greenback.While the government has once again set a higher target for exports during FY-12 and expects to earn more dollars this year, many analysts disagreed with this opinion or target.
Topline Research in its report said major determinant was the external account that kept rupee stable against the greenback. “The primary reason for the improvement was 27 per cent rise in the exports to $23 billion (on account of favorable cotton prices), 25 per cent surge in worker remittances along with CSF (Coalition Support Fund) inflows of $743m,` said Mohammad Sohail, CEO of Topline Research.
This favourable situation built-up foreign exchange reserves to above $17.5 billion, which kept local currency stable against the dollar.
During 11 months of FY-11, the current account stood at a surplus of $205 million as compared to deficit of $3.4 billion in the same period of last year.
“The external account was a major determinant in the currency market. After a lapse of seven years country`s current account is expected to show a surplus of approximately $100 million,” said Sohail.
Fiscal 2011: Rupee adds strength to economy | Business | DAWN.COM