KARACHI: The foreign direct investment (FDI) dropped by a whopping 40.7 percent to 3.9 million during the first seven months (July-January) of the current fiscal year from .002 billion in the same period last year, suggests official data issued on Wednesday.

Analysts say that there are a number of macroeconomic indicators whose performance are responsible for the decline in the FDI, notable among which is the steadily declining rupee value.

Anyone seeking to invest in this country would take account of the rate of profit on the transaction, but also the applicable exchange rate at the time of repatriating the profit that determined the real rate of return, the analysts said.

The eroding value of the rupee is attributable to the rising budget deficits and the increasing reliance of the government on borrowing both from external sources, as well as domestically.

In January alone, the FDI declined to .9 million against the inflows of 2.5 million in January 2011.

Overall, foreign investment in the country dropped by an alarming 63.9 percent to 6.2 million during the seven months of the current fiscal against .236 billion in the same period last year.

The central bank has recorded foreign private inflows of 4.9 million that has dropped from .306 billion during the corresponding period last fiscal year.

The foreign fund managers and stock investors remained wary of the country’s uncertain political and energy crisis-hit economic environment as an outflow of 9 million portfolio investment was witnessed during the period. It has an inflow of 4.2 million last year.

The only positive observed was in foreign public investment, which stood at .3 million during the subject period. It has an outflow of .4 million last year.

North America remained the largest foreign direct investor, injecting 9.9 million. North American investors have evinced greater confidence in Pakistan’s economy as their FDI has surged by a massive 94.1 percent from 4.2 million last year.

Out of this, 9.9 million inflows, United States contributed 8.7 million.

The European Union marginally squeezed their foreign direct exposure in the country as their investment stood at .3 million during the seven months of the current fiscal year against 7.1 million last year.

Singapore, the UAE, Oman and Egypt were the leading withdrawers of FDI taking back .8 million, million, .9 million and .3 million, respectively.