SBP asked to do more to stem free fall of rupee

SBP asked to do more to stem free fall of rupee

Sept 20

The Federation of Pakistan Chambers of Commerce and Industry (FPCCI) on Friday said the efforts of State Bank of Pakistan have stabilised the eroding currency to some extent but more should be done to stop its free fall.

Many among the business community think that monetary sovereignty has been surrendered to the IMF which has resulted in defeat of rupee at the hands of dollar on all fronts, said Muhammad Ali, Vice President FPCCI.

Speaking to the business community, he said that inter-bank as well as open market continues to see fall of the rupee which has lost around 7 per cent value since the current pro-business government has taken.  

Rupee may soon join club of other currencies which have seen double digit depreciation against the dollar, he said.

He said that inaction on the part of the government has resulted in a panic-like situation among masses putting additional pressure on the local currency.

Muhammad Ali said that the local currency has lost ability to resist the onslaught of dollar because the government has adopted a cool attitude towards the problem.

Government was deliberately devaluing the local currency without an announcement which indicates that there is something worth hiding from the general public.

India, Brazil and other countries have taken serious measures to save their currency while our economic managers have decided that local currency must shed points on daily basis, he observed.

The agreement with the IMF or paying back loan has failed to strengthen the rupee or the economy and it seems that the depreciation would not stop as long as IMF desires, said Muhammad Ali.  

Import of petroleum products alone are enough to create imbalances on external account, reduce the country’s import capability and hit the exchange rate for further devaluation of local rupee.

Devaluation will make imports costly reducing their demand while exports cheaper depriving manufacturers of incentive to cut costs and become more efficient which will increase production cost over time.

Why the government and the SBP have failed to foil the plans of speculative forces, he questioned.

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Rising dollar and falling rupee exposes Govt, IMF deal

Rising dollar and falling rupee exposes Govt, IMF deal

July 26

The Pakistan Economy Watch (PEW) on Friday said rising dollar and falling rupee has exposed the secret deal between government and IMF to depreciate the local currency.

The sliding rupee has also exposed expertise of the economic managers of the incumbent government, it said.

The deal between government and the lender is also evident from the role of SBP which has been reluctant to take concrete steps to stabilise the exchange rate, said Dr Murtaza Mughal, President PEW.

He said that depreciation in the value of rupee will invite inflation as Pakistan heavily relies on imports. Moreover, it will add to the foreign debt and make life of masses miserable.

Overseas Pakistanis will prefer to send money through hundi as the difference in interbank and open market rate is at unprecedented level, he added.

Dr Murtaza Mughal said that there was no justification in the rapid erosion of rupee as overall economic situation was calm, indicators are as usual and there was not major change in the position of forex reserves.

A check on Dubai-bound flights can expose all the elements involved in flight of capital, hoarding of dollars and turning of black money into white, an evidence of blooming grey economy, he informed.

Exchange rates should not be taken lightly as it is among the most analysed and forecasted indicators in the world. The currency markets are the most liquid in the world with a daily turnover of close to $2 trillion as compare to $ 70 billion on the New York Stock Exchange.

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