On Tuesday, Exporters had halted yarn sales as the depreciating dollar slashed their profit margins, resulting in higher availability of the raw material at cheaper rates in the domestic market.
Meanwhile, industry sources were also hopeful that the recent initiative by Pakistan for normalisation of relations with India could pave the way for cheaper cotton yarn imports from across the border.
The value-added division has been demanding the government to allow the import of yarn from India since prices are cheaper while the locally produced yarn is costlier. Spinners who produce yarn were of the view that the raw material was costlier due to costly cotton imports.
With the falling of currency rates, imported cotton would also be much cheaper for the industry in Pakistan.
Pakistan is importing cotton from many countries including the United States which increased the cost of production.
Cotton production in the country fell by 34.4 per cent against the target while consumption continues to increase.
Aamir Aziz, an exporter of finished textile products said; “The recent decline in yarn prices is neither significant nor there is any certainty that prices would remain stable as it is mainly because of a sudden drop in US dollar prices.”
Yarn exporters who sold their products at the rate of Rs160-161 now face a decline in their profits. The dollar is around Rs157 in the inter-bank market, with daily fluctuations in the exchange rate. The dollar lost 7.5pc in value since August against the Pak rupee.
Cheaper US dollar has led to a reduction in the prices of imported cotton yarn and now it would be in competition with the domestically produced yarn with lower prices. Local yarns merchants have reduced prices depending upon grading of yarn.
