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Exporters lose as rupee firms up us European currencies

SHAHID IQBAL

KARACHI: The rupee appreciated by an average of 17 percent against European currencies in the last one year which resulting in heavy losses to the exporters.

The government has decided to develop a mechanism to absorb the shocks of devaluation of European currencies against the rupee.

Since the beginning of the year 1999, the European currencies frequently shed their value against the rupee.

From January 1999 to February 2000, Euro came down from Rs. 59.13 to Rs. 50.12 Ñ a decline of 15.2 percent.

Similarly, German mark declined from Rs. 30.28 to Rs. 25.62, a decline of 15.3 percent, and French franc slipped from Rs. 9.02 to Rs. 7.59, a decline of 15.9 percent in the same time period.

Since the European countries make payments in their own local currencies, Pakistani exporters have to bear the losses in event of their devaluation against the rupee and the US dollar.

"In the last one year, both the rupee and the US dollar proved stronger than the European currencies. The dollar has been dominating the European currencies, which increased their exports to the USA," said an exporter in Karachi.

However, the continuous fall of the European currencies against the rupee produced negative impact on Pakistani exporters.

"The average loss of the exporters is not less than 17 percent, which comes to hundreds of millions of rupees," said exporters.

The exporters of textile products said that over 50 percent of our products go to the European market, which comes to over 2.5 billion US dollar.

We have told the government that a mechanism should be evolved to minimise the losses being faced by us," said the exporters.

They said the commerce minister has assured to develop some kind of mechanism to absorb the fluctuations, mostly depreciation of the European currencies against the rupee.

"But there is no move to devalue the rupee against the European currencies. We did not demand it," said an exporter, who recently met the commerce minister and explained this problem.

"The government is considering to form a kind of basket that will reduce the exporters losses. However, the idea is yet to be finalised," said exporters.

They said the government is aware that a long-term strategy is needed to face the situation "as the dollar domination will continue at least for another decade."