South Asia Investor Review

Pakistani rupee has sharply declined to 109.50 rupees to a US dollar, a loss of nearly 10% of its value in just a few months since Mr. Nawaz Sharif was sworn in as Prime Minister in June, 2013. At the same time, the foreign exchange reserves have plunged to $3.463 billion, a 12-year low  since November 2001 when country had foreign reserves of $3.5 billion. The drop in rupee and foreign exchange reserves is happening in spite of the fact that remittances from overseas Pakistanis are setting new record highs and IMF bailout funds are also being disbursed. Overseas Pakistanis Remittances: Overseas Pakistanis have sent home over $55 billion since 2008-9 . Last fiscal year alone, expatriates remitted about $14 billion. Additional $ 5.3 billion in remittances have flowed in the first four months (July-October) of the current fiscal year 2013-14, a increase of 6.27 percent over the same period last year. Foreign Direct Investment: Net foreign direct investment (FDI) has sur...

In spite of cheaper valuations of Karachi stocks from shrinking price earnings multiples relative to other markets, foreign investors in Pakistan continue to be nervous. As soon as the trading range was revised to plus or minus 5%, many investors took advantage to sell their holdings Friday and pushed the KSE-100 down more than 4%. The decline continued this week as the KSE-100 index lost 265.84 to close at 11,695.82. Earlier in the morning, it opened at 11,961.66. This is a far cry from the peak of 15739.25 earlier this year. "The measures taken on Friday proved to be an exit strategy for foreign investors," Asad Iqbal, managing director at Ismail Iqbal Securities Ltd. told Business Recorder newspaper in Karachi. Securities and Exchange Commission Chairman Razi-ur-Rehman believes the market has a liquidity crisis and he blamed the bearish trend in the equity market on the State Bank of Pakistan's (SBP) tight monetary policy, which has affected market liquidity. The State...

Pakistani Rupee has hit a new low at Rs. 66.00 for a US dollar. The rupee decline seems to have accelerated recently against a weak US currency amid reports of rising imports, stagnant exports and falling foreign exchange reserves held by the State Bank of Pakistan. “The fast erosion in the central bank reserves is creating pressures on the rupee,” the treasury dealer Rehanuddin at Invest Cap told the Gulf Times. The central bank has so far lost around $4bn in the last five months to $12.65bn this week over $16.48bn on October 31. Analysts say the reserves will dwindle to $10bn by the end of the fiscal year on June 30. “Political uncertainty, lack of foreign investment and import pressures have badly hit reserves,” Aqeel Ahmed, senior analyst at First Cap Securities, said. "The import pressure is rising rapidly on high oil prices, our exports are not increasing due to food shortage while foreign investment is also slow and all these factors are contributing to the weaknesses of t...