Faizan Saleem
The Government of Pakistan looks determined to ease rising pressure from the Pakistan currency which touched to its lowest level in the month of December.
In this regard, the Government has started to exclude the need of dollar by carrying out transactions in the local currencies. In this regard, it has signed two swap agreements with Turkey and China to promote trade and business relations between the countries.
The bilateral currency swap agreement is of 10 billion Chinese Yuan ($1.58 billion) for 140 billion Pakistani rupees ($1.57 billion) which would end in three years.
The Pak rupee against the US dollar has remained unstable since the start of the financial year owing to deteriorated ties of Pak-US and liquidity shortages. Moreover, the external situation is expected to remain uncertain in upcoming months as the global economic outlook is unlikely to get revived and could drive further deterioration on the external front.
Decline in FDI has been compensated by remittances but, with trade gap to widen after surge in oil prices, country needs to boost its value added exports. PKR depreciation will have negative impact on current account deficit, inflation, and among specific industries; it will have negative impact on auto sector.
In such situation, the currency swap arrangements with other major trading partners could reduce dollar demand and stabilize the rupee. Through this currency swap facility, the traders and businessmen of the respective countries would be able to trade in their respective currencies obviating the need to look for dollars or other foreign currencies to do business.
The deterioration in Pakistan rupee was mainly due to higher demand of US dollar to payoff hefty oil import bill and debt payments, which is expected to rise in the second half of the financial year. Pakistan government also has to pay back $1.4 billion to the International Monetary Fund (IMF) in the month of Feb-2012 as first installment of the loan of $8.7 billion.
The business community hails the efforts of the government as dealing in local currency would provide more conducive atmosphere to execute trade deal. China and Turkey are the major trading partners of Pakistan and this step would also help to narrow down the trade deficit as well. It would also help to save the dollar reserves of the country which could be used in some productive avenue.
http://halaltamweel.com/2011/12/27/News/Currency-swap--Positive-step-to-provide-trade-atmosphere/2878/Story.aspx
The Government of Pakistan looks determined to ease rising pressure from the Pakistan currency which touched to its lowest level in the month of December.
In this regard, the Government has started to exclude the need of dollar by carrying out transactions in the local currencies. In this regard, it has signed two swap agreements with Turkey and China to promote trade and business relations between the countries.
The bilateral currency swap agreement is of 10 billion Chinese Yuan ($1.58 billion) for 140 billion Pakistani rupees ($1.57 billion) which would end in three years.
The Pak rupee against the US dollar has remained unstable since the start of the financial year owing to deteriorated ties of Pak-US and liquidity shortages. Moreover, the external situation is expected to remain uncertain in upcoming months as the global economic outlook is unlikely to get revived and could drive further deterioration on the external front.
Decline in FDI has been compensated by remittances but, with trade gap to widen after surge in oil prices, country needs to boost its value added exports. PKR depreciation will have negative impact on current account deficit, inflation, and among specific industries; it will have negative impact on auto sector.
In such situation, the currency swap arrangements with other major trading partners could reduce dollar demand and stabilize the rupee. Through this currency swap facility, the traders and businessmen of the respective countries would be able to trade in their respective currencies obviating the need to look for dollars or other foreign currencies to do business.
The deterioration in Pakistan rupee was mainly due to higher demand of US dollar to payoff hefty oil import bill and debt payments, which is expected to rise in the second half of the financial year. Pakistan government also has to pay back $1.4 billion to the International Monetary Fund (IMF) in the month of Feb-2012 as first installment of the loan of $8.7 billion.
The business community hails the efforts of the government as dealing in local currency would provide more conducive atmosphere to execute trade deal. China and Turkey are the major trading partners of Pakistan and this step would also help to narrow down the trade deficit as well. It would also help to save the dollar reserves of the country which could be used in some productive avenue.
http://halaltamweel.com/2011/12/27/News/Currency-swap--Positive-step-to-provide-trade-atmosphere/2878/Story.aspx
No comments:
Post a Comment