ISLAMABAD: The business community has expressed grave concern over the constant depreciation of Pakistani rupee against the US dollar, and called upon the government, especially the ministry of finance and the State Bank of Pakistan, to take urgent measures to stop the currency’s free fall.
Talking to WealthPK, Mehar Kashif Younis, former senior vice-president of Lahore Chamber of Commerce and Industry, said political unrest wreaked havoc on the currency, dragging it to an all-time low, which worried the business community.
He said any abrupt change on the political front would jeopardise the disbursement of the loan schedule of the International Monetary Fund.
He was of the opinion that sharp fluctuation in the exchange rate appeared to be the result of political turmoil in the wake of by-elections in the Punjab province. He said political and economic developments would have a direct bearing on the welfare of ordinary people trying to cope with multi-year high inflation, increasing job losses and eroding purchasing power.
Mehar Kashif said it’s high time the entire political leadership sat together to build a consensus to resolve the political and economic issues critical to the future of the country.
He said it was a good omen that Pakistan had received commitments of $4bn in assistance from friendly countries, besides the $1.2bn tranche from the IMF.
“However, ground realities warrant immediate provision of relief to businesses community to offset the dollar flight.”
Mehar Younis said exorbitant rupee devaluation was taking place as inter-bank dollar rate had plunged to historic lows. He said rupee lost 7% of its value in a single day, which was alarming. He said since the industry heavily relied on imports of raw materials, components and machinery, this devaluation had resulted in an increase in the cost of production.
He suggested doing trade in local currencies, particularly with China, which would help Pakistan end reliance on dollar in bilateral trade and bring down trade deficit. He said Pakistan’s mutual trade volume only with China was over $13 billion, and if the country made currency swap agreements with regional countries in general and with China in particular, it would significantly lift pressure off the foreign exchange reserves and dependency on the dollar would be decreased.
The businessman said trade deficit was one of the major reasons of rupee devaluation, and the currency swap agreements with regional countries would help make Pakistani currency stronger, as weak rupee against the dollar had become a serious matter of concern.
He reiterated that political stability is a prerequisite to economic stability.
Meanwhile, President of SAARC Chamber of Commerce and Industry Iftikhar Ali Malik also expressed his grave concern over the current political upheaval, the nose-diving rupee, widening trade deficit and the delay in the release of IMF tranche, which inflicted heavy losses on the economy.
He said political unrest was also badly hitting the already bleak economy, which was also directly responsible for quick depreciation of rupee and the plunging stocks.
Iftikhar Malik lamented that trade deficit was widening at alarming levels and this must be arrested to save the fractured economy. He said the business community was worried about the prevailing sorry state of affairs.
He demanded that the government immediately devise a charter of economy and enforce it to avert any economic disaster.
He said business community, a backbone of economy, would continue to play its role in national development, but political stability and a business-friendly environment were key factors for smooth flow of foreign direct investment and business development.
He also sought a complete ban on import of luxury items and boosting exports to shrink trade deficit. He said it is a fact worldwide that political stability is a prerequisite for sustainable economic growth. He said higher inflation also reduced economic growth and added misery to the poor.
