Currency's future remains unclear for the moment

The devaluation of the Pakistani rupee in recent months has caused anxieties at a time when there are growing concerns over the country's economy slowing down.

The rupee has remained largely stable in the past seven years since Pakistan joined the so-called US- led war on terror and became the beneficiary of billions of dollars in US-led assistance.

However, the future of the Pakistani currency has become unclear in the past year as it becomes increasingly clear that economic activity has begun to slow down in the face of mounting political uncertainty.

For the moment, it is just not possible to come up with a reliable enough assessment of the currency's future. Much of the outlook for Pakistan's future depends on the outcome of parliamentary elections next month, the credibility of which has already been tarnished by opposition-backed denunciations.

Opposition leaders insist that the election will just not be either free or fair or impartial as long as President Pervez Musharraf is in the driving seat, overseeing the electoral process. The consequence of this political uncertainty, warn critics, will only bring further uncertainty to the economy.

The effects of the political situation have tagged on to some of Pakistan's mounting challenges. These include a widening international trade deficit owing to Pakistan's failure to see a large enough rise in exports while the country's imports, including significant chunks of luxury goods, remain a compelling reality.

There is also the challenge of managing an economy that relies on imports for almost all of its petroleum-related needs. In the past one year, rising oil prices have become a key constraint for Pakistan, with consequences ranging from a rising import bill to soaring fiscal deficit. Those sorts of pressures will also add to the call for the rupee's devaluation in future.

For the moment, investors in Pakistan face a tough dilemma. Many of them will probably feel that it's in their best interest to convert their earnings into another currency. And yet, given that the interest rates in Pakistan remain high, returns to savers will continue to be better than some of the world's other low interest environments.

There are no easy solutions to this dilemma. In the short term though, even if investors and savers head into other avenues, investing in Pakistan presents both opportunities and challenges, and the way to score a few decent points on the investment front will be to benefit from the opportunities. At present, while the stock market presents a difficult choice, other areas that offer greater appeal include the area of real estate, where bargain hunters have a tremendous opportunity.

With prices of real estate on average down by even half compared to their peak of two to three years ago, it is not difficult to identify such attractive propositions. For bargain hunters armed with substantial savings in rupees, the best opportunities are available for real estate investments in cities such as Karachi, Lahore, Rawalpindi and Islamabad.

The choice for rupee investors and savers may well urge them to consider if they are better off investing and saving in Pakistan or abroad. While the country is going through a period of political turbulence, ultimately the situation must settle down for the better. Pakistan is a country with a population of more than 165 million with a large enough economy that keeps it afloat irrespective of howsoever events turn out. There has to be an upturn as time goes by.

- The writer is a journalist based in Pakistan.