Stronger rupee heralds drop in commodity prices

Attention: open in a new window. PDFPrintE-mail

KARACHI: Rising strength of the rupee against the dollar has enlivened hopes for price drop in various imported commodities by at least five to 10 per cent besides cut in various petroleum products prices. Trade and industry stakeholders foresee price cut in various imported products as $1 is now equal to Rs100 in interbank market as compared to Rs105-106 in the last two months. The US currency hit all-time high at Rs112 two months back for a brief period.

Pakistan Refinery Limited (PRL) Managing Director Aftab Husain sees greater impact on domestic oil prices as exchange rate is directly proportional to import parity price.

Pakistan meets 60-65 per cent of diesel demand through imports. “If the rupee’s upward journey continues then there will be very positive impact on domestic oil prices. But the collection of sales tax by the government will be lower due to fall in consumer price of any oil product,” he said.

It is essential that exchange rate must be stabilised and in the next 20 days the rupee’s increasing strength will significantly impact at the end of the month price buildup, he added. The MD PRL said last month the domestic oil prices were worked out at exchange rate of Rs105. At the end of March, the exchange rate is expected to stabilise lower than the previous month.

For example, in case the rupee stabilises at Rs100 then the expected price decrease would be around Rs3 per litre in diesel mainly if the government taxes and international oil prices remain at current level.

Karachi Wholesalers Grocers Association (KWGA), Anis Majeed, said, “Imported food items prices will fall by five to 10 per cent.”

The import bill of petroleum products will also come down thus putting a major impact on price in the long run, and overall foreign loan repayment will be reduced as US dollar will be bought in less price, he said.

Food items from now onwards will gradually come down. It will take different product different time period depending on the availability of cargo and the cargo on the way, he said.

Anis added in case international prices go up and rupee continuously gains then it will definitely keep prices stable at domestic level.

He said the price of imported pulses would fall by Rs5 to Rs10 per kg depending on stability in international prices and trading of one dollar to Rs 100 in interbank market.

An importer of pulses, spices, juices, milk etc., Haroon Agar estimates at least 10 per cent plunge in prices of pulses, spices, juices, milk powder etc.

Commercial importers usually pass rupee-dollar fluctuation in two to three days but retailers do not share the falling wholesale price with the consumers, he said urging the government to monitor retail prices and ensure that consumers could avail full benefit of low cost of import due to losing value of the dollar.

Secretary General Pakistan Vanaspati Manufacturers Association (PVMA) Umer Islam Khan hoped that the price of five kg/litre ghee and cooking oil tin would become lower by Rs20 while the price of 16 kg/litre ghee and cooking oil tin would reduce by Rs50 in the next 15-20 days in view of one dollar value at Rs100 as compared to Rs105.

Former chairman Pakistan Tea Association (PTA) Hamid Khawaja said tea price would plummet by around Rs3 to four per kg. In case the dollar value remains at Rs100 and importers open LCs at this rate then its impact on domestic prices will be visible when shipments will arrive after six weeks.

Pakistan’s food import bill comprising palm oil, tea, pulses, spices, powdered milk, sugar and other food items hovers between $4 to $5 billion per year.


Forex open Market rates & comments Archive

Login Form