The Federation of Pakistan Chambers of Commerce and Industry president Mian Anjum Nisar has urged the government to control surge of dollar against Pakistani currency, as the rupee has dropped to more than two-month low of 167.65 against greenback in the interbank market while it has fallen to 168 versus the US dollar in the open trade.
FPCCI President, in a statement issued here on Wednesday, observed that the rupee has dropped by Rs1.08 against the dollar in a single session in the interbank market, falling to 167.77, a level last seen in the start of April. He said that huge depreciation of Rupee continued to damage national economy, as the cost of deals done by the businessmen with their foreign counterparts has increased manifold due to massive fall of rupee against dollar. Apart from increasing exports and controlling imports the government will have to take administrative measures, as a large demand of cash dollars are seen in the market, he suggested. He said that the rupee has dropped by 2.8 percent or Rs4.55 against the dollar since the start of June, as it was closed at 163.10 at the end of last month.
Mian Anjum Nisar appreciated the positive development, related to the imports, which have now started decreasing since the last financial year followed by the government’s initiative of imposing regulatory duties. He said that the country would hopefully receive multilateral inflows during this week, which could help strengthen the rupee and the foreign exchange reserves, as the government has signed a $1.5 billion loan agreement with the World Bank, Asian Development Bank and Asian Infrastructure Investment Bank.
FPCCI President said that excessive government borrowing, absence of foreign flows, lack of foreign investment and the huge current account deficit are the vital reasons for constant depreciation of Pak rupee. Terming rupee depreciation against dollar a mysterious development, the leader of business community said that continued fall of rupee is not understandable with a fact that there was no fundamental change in country’s imports during last few months while other economic indicators are also same for a long time.
He said that the local currency has been under pressure due to falling foreign exchange reserves and increasing outflows amid foreign debt repayments. The SBP’s foreign exchange reserves have been under pressure due to external debt repayments recently, which were dropped to $10.1 billion as of June 12 from $12.3 billion on May 8.
Mian Anjum Nisar was of the view that State Bank of Pakistan and Ministry of Finance will have to remain vigilant in this regard. Besides this, the SBP and the government also need to intervene and come up with policy reforms to control depreciation of rupee which is becoming more and more valueless. He said that it was unfortunate that Pakistan had announced to start its financial transaction with several countries under currency swap agreement some seven years back in 2013 aiming at controlling its import bill and balance of payment, but no implementation is seen so far.
He observed that causes of depreciation of a currency are multiple which in combination push and pull the respective currency’s quotation in conjunction with other currency. If there is more demand for dollars in Pakistan than the supply, the rupee would definitely depreciate. So, the government should take steps to commence trade with other countries in local currencies with special emphasis on greater foreign investment in Pakistan’s lagging value-addition economic activities for making meaningful improvement in bilateral trade balance, he added.
“FPCCI demands of the Finance Ministry to immediately intervene and make some hefty correction in Pakistani Rupee, as the business community of Pakistan is in great frustration on this continuous devaluation of domestic currency,” he said.