Easy dollar inflows enable rupee to resist sharp fall

The rupee resisted sharp fall against dollar throughout last fiscal year 2006-07, currency analysts said. During the whole fiscal year, in the interbank market, the rupee shed 13 paisa against dollar for buying and selling at 60.20 and 60.22, they said.
The rupee also fell against the dollar in the open market, losing 20 paisa for buying at 60.90 and 22 paisa for selling at 61.00. However, the Pak currency fell sharply in terms of euro, losing six-rupee value to Rs 81.93 and Rs 82.03, they said. The rupee also lost heavily--Rs 11--against pound sterling to Rs 121.60 and Rs 121.70 for buying and selling, respectively.
Commenting on slight variation in rupee value against dollar, analysts said that dollarisation culture was discouraged in the country as the people had the only way to invest their money. Now they are keen to invest in the other sectors, ie property, setting up of private schools and computers.
They attributed the light fluctuation in the rupee versus dollar to the rising trend in supplies of dollars. They said that there was healthier trend in inflows from remittances from overseas Pakistanis and from foreign investors during the last fiscal year.
The rupee resisted steep decline versus dollar due to firm trend in the foreign exchange reserves, they observed. The feature of the year was that upward trend in the remittances and foreign direct investment (FDI) pushed the country's reserves to a record high at 15.182 billion dollars.
It was expected that the rupee might maintain its steady trend in the days to come, they said. They said that huge gap between the exports and imports caused widening trade deficit, they said.
This factor pushed the demand for dollars up by importers, resulting in the rupee value slight fall, they said. After observing no significant impact on exports of textile goods, the State Bank of Pakistan (SBP) kept the rupee-dollar official parity rate almost unchanged in both the open and the interbank markets, they said.
Absence of sharp fluctuation in rupee value against dollar discouraged the Hundi and Hawala and also helped in wiping out the gap between open and inter-market rates.
Local small investors refrained from buy dollar. Instead, they started pouring money in the housing or computer business, currency dealers said. Globally, weaker trend in the dollar was also a factor which helped the rupee to maintain its level, they said.