‘Appreciation to impact exports’
KARACHI: The prolonged currency fluctuation period has created uncertainty and confusion, not only in domestic market but also for exporters as they are unable to quote the correct price required for entering into deals with their foreign buyers.
Leading exporters have expressed their resentment over the current situation with rupee appreciating by around 1.56 per cent or Rs2.10 over the dollar on Wednesday.
“Only last week there was a dip and today there is an appreciation in the rupee value against the dollar,” stated the Chairman Pakistan Bedwear Exporters Association.
Exporters have become hostage to the uncertainty because there is always a fear of huge loss when locking a deal, he added.
“It could be said that currently the exporters have adopted a ‘wait and watch’ strategy as, in case they sign an export contract at the current rupee-dollar parity and within a week the rupee appreciates against the dollar, it will cause immense loss to them,” lamented Shabir Ahmed.
He further said that only last week he entered into an export contract with rupee at 134.00 against the dollar, but today the tables have turned and dollar has fell to Rs131.8, following Saudi Arabia’s $6 billion financial support to Pakistan.
This contract would cause substantial loss to his company now.
Naqi Bari, a leading exporter of home textiles, said that the current uncertainty on currency market is also causing difficulty for exporters to know the exact per unit cost of their products because many components are imported and the rupee-dollar parity has a direct impact on imported goods as well.
Aslam Karsaz, exporter of value-added textile goods, said the erratic price movement in currency is adversely impacting cotton, yarn and fabric prices which are major inputs of value-added textile goods.
Pakistan Hosiery Manufacturers Association Chairman Jawed Bilwani said that currently exporters find themselves stuck between the ‘devil and the deep blue sea’ because when the rupee depreciates the buyers immediately ask for a margin. This results in little gain to exporters.
However, when the rupee appreciates against the dollar, buyers are not willing to pay the increased per unit price of the product which leaves exporters in a fix.
In both the situations, the exports suffer badly because around 50 per cent of components used in our products are imported which become costlier if the rupee depreciates, he added.
Bilwani urged that this should come to an end at the earliest so that exporters could enter into export contracts without apprehension over the quoted price for their products or any subsequent losses due to currency value fluctuations.
Pulished in Dawn, October 25th , 2018
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