KARACHI: The rupee depreciated against all major currencies in the first quarter of 2017, leaving a positive impact on exports.

According to the monthly Statistical Bulletin of the State Bank of Pakistan (SBP) issued on Thursday, the local currency fell against all major as well as regional currencies, except the Iranian rial. Pakistani exports to Iran declined during the first quarter of 2017.

The country has been struggling to grow its exports. With ever-increasing imports, the trade deficit in the first nine months of the current fiscal year reached $23 billion. A depreciation of the local currency and an increase in exports are positive signs for the country’s export sector.

China and the United States are Pakistan’s two major trading partners. The rupee depreciated against their respective currencies, which resulted in an increase in the exports from Pakistan.

The rupee fell 0.04 per cent against the dollar in Jan-March while exports rose 3.4pc year-on-year to $916.9 million during the three months.

In the case of China, the currency declined 0.89pc and the exports went up 15.6pc to Rs$489.3m.

The rupee depreciated against the pound by 1.25pc and the exports rose to $410m in the same period.

Exporters have been demanding that the local currency should be depreciated to boost exports. But policymakers were not convinced of the exporters’ argument in favour of depreciation. In the past, the government depreciated the local currency to support exporters, but the move did not yield desired results.

Economists believe that the rupee needs to depreciate 5-8pc as the currency is overvalued. However, the government has strictly managed the exchange rate regime. The change in the rupee’s value against the dollar has not been significant in the last one year. The rupee depreciated significantly in the open market during this period. But the SBP used its influence to keep the rupee-dollar parity almost unchanged in the interbank market.

In Jan-March, the rupee recorded the highest depreciation against the South Korean currency. The rupee depreciated 7.68pc against the won over the period under review while exports to the country rose 26.7pc to $86.3m.

In South Asia, the rupee is the weakest currency, except the Afghan currency. The rupee depreciated 4.62pc against its Indian counterpart in the first quarter of this year. Exports to India increased 2.6pc to $88.5m.

The rupee appreciated 0.65pc against the Iranian rial while exports to Iran fell 20pc to $6.4m.

The rupee depreciated against the Australian dollar by 5.33pc, Canadian dollar 0.91pc, Taiwan dollar 5.3pc, euro 1.44pc and yen 4.11pc. Pakistan’s exports to each of these countries increased over the three-month period.

Published in Dawn, May 5th, 2017