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September 29, 2010

Exporters seek govt steps to bring down inflation, boost exports

Top Story

September 29, 2010

LAHORE: Exporters have appealed the government to stabilise the rupee and bring down inflation to boost exports that have historically increased on stable currency and low inflation.
Leading exporters M I Khurram (knitwear), Nabeel Hashmi (auto-parts) Shahzad Malik (rice), S M Tanveer (yarn) and Almas Hyder (packaging) gave a presentation to The News that showed that exports get a boost in low inflation and stable rupee. The statistics in the presentation were taken from the Statistical Bureau of Pakistan.
According to the presentation, the rupee remained in the range of Rs51.6 to Rs52.04 against the dollar from July 1999 to June 2000 and the exports during the period amounted to $8.569 billion, registering an increase of 10 percent over the previous year on low inflation of 3.51 percent.
The dollar value gradually increased in 2000/01 from Rs52.5 in July to Rs63.4 in June 2001. It was a massive decline of almost 20 percent in the rupee value in a year.
However, the exports did not correspond to the decline in the rupee value and merely increased by $700 million to $9.2 billion. This increase was aided by another low consumer price index (CPI) of 4.41 percent.
The 2001-02 was a year of turmoil for the economy of Pakistan because of 9/11 that effectively restricted market access for Pakistani goods to the United States and the European Union.
However, the increase in the rupee value after 9/11 saved the day for Pakistan and the country suffered nominal decline in exports that amounted to $9.13 billion. The rupee appreciated against the dollar from Rs64.09 in July 2001 to Rs60.12 by the end of June 2002. The CPI inflation in 2001/02 was 3.54 percent.
According to the presentation, the rupee appreciated against the dollar in 2002/03 from Rs59.7 in July 2002 to Rs57.7 in July 2003.
The exports increased by 21 percent on the strength of appreciating rupee value to $11.16 billion again aided by extremely low CPI of 3.1 percent.
In 2003/04,

the rupee value fluctuated from Rs57.7-Rs57.9 and inflation was 4.57 percent. The exports increased by over 10 percent to $12.3 billion. During the next fiscal year, the exports increased by 16 percent to $14.39 billion as the rupee value increased from Rs58.27 against the dollar in July 2004 to Rs59.66 in June 2005 against the CPI of 9.58 percent.
In 2005/06, exports were $16.45 billion against inflation rate of 7.92 percent, but the dollar remained stable at Rs60.16. In the next fiscal year, the exports totalled $16.97 billion and the rupee value again remained almost stable by the end June 2007 at Rs60.60 and inflation was 7.77 percent.
Likewise, in 2007/08 the rupee was valued at Rs60.39, but its value gradually increased by the end of June 2008 to Rs67.25 and the exports increased to $19.05 billion and inflation (CPI) was 12 percent.
The export momentum achieved during the first six months of this fiscal year tapered off in the last half as the rupee depreciated and inflation increased.
In 2008/09, inflation averaged 20.3 percent and the rupee value depreciated rapidly to reach Rs80 against the dollar by November 2008 and remained in the same range by the end of June 2009.
The exports dipped by 6.1 percent to $17.69. The exports increased to $19.34 percent in 2009/10 when the rupee decline was restricted to around five percent and the inflation averaged 12 percent, according to the presentation.

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