Rupee likely to decline 3.5pc in 2011

Rupee likely to decline 3.5pc in 2011

KARACHI - The total inflow of workers’ remittances into Pakistan is expected to have increased by 11.5 per cent YoY to $9.7 billion in 2010 from the remittances of $8.7 billion witnessed during 2009, according to the latest report of the Standard Chartered Bank.

The SCB Global Research report projected that the remittances would grow by 10 per cent to $10.7 billion at the end of the current calendar year, helping to contain the current account deficit at 3 per cent of GDP.

The report also predicted that the Pak rupee would remain under pressure over the year 2011 on account of large external debt payments, rising commodity prices and a slowdown in FDI inflows.

The report expected Pakistan’s currency to decline by 3.5 per cent YoY in 2011, to around at Rs89.8 versus the US dollar by December 2011.

As per the report findings, the PKR has depreciated by 2 per cent in 2010 compared with large depreciations of 28 per cent in 2008 and 8 per cent in 2009.

“The end of the IMF program in December 2010 will test PKR strength,” it said.

“Strong remittance growth in 2010 has played a key role in keeping the Pakistani rupee (PKR) stable, and mitigating the impact of rising international commodity prices and a slowdown in FDI and portfolio investment,” it added.

According to report, the inflows of worker remittances grew 8.4 per cent MoM in November, to $927million, as overseas workers sent home more money ahead of the traditional Eid festival.