Miftah blames political turmoil for rupee’s historic downturn against dollar: Miftah
Vows measures to keep imports, current account deficit under control | $8b likely to pour in during current financial year
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Finance Minister Miftah Ismail said that political turmoil in the country was to blame for the current downturn of the Pakistani rupee which slid to a historic low of Rs225 against the US dollar in the interbank market on Wednesday, reported 24NewsHD TV channel.
The finance minister also stated while talking to the media that the current panic in the local market was primarily due to political turmoil in the country, adding that it would subside in a few days. “I expect the pressure on the rupee to fall in the next few days,” he maintained.
The financial analysts, on the other hand, have attributed the decline of the local currency to the lack of proper economic guidance amid political uncertainty in the country and the State Bank of Pakistan (SBP) not intervening.
According to the Forex Association of Pakistan, the Pakistani rupee was being traded at Rs225 at 10:30am, down Rs3.01 or 1.3 per cent, from the yesterday’s close of Rs221.99.
Meanwhile, the finance minister tweeted that imports to July 18 had been $2.6 billion, 20 per cent below than last year.
“We will end the month at $5.5 billion. The runaway imports from last year have come under control this month, thanks to the SBP measures. We will continue with these measures in the near term to ensure imports and current account deficit (CAD) remain under control,” he stated.
Imports to July 18 have been $2.6b, 20% below last year. We will end the month at $5.5b. The runaway imports from last year have come under control this month thanks to SBP measures. Will continue with these measures in the near term to ensure imports & CAD remain under control.— Miftah Ismail (@MiftahIsmail) July 20, 2022
Later, while addressing a press conference, Finance Minister Miftah Ismail reiterated that the government tried its best to minimise the imports.
He said that the imports during the months of April and June remained low, adding that the deficit increased when the imports grew.
He maintained that the government’s ban on the import of cars and cell phones from abroad also proved to be beneficial.
He acknowledged that many fuel hoarders benefited from increase in the petrol prices.
“I will talk about the devaluation of the rupee in Pakistan. During the last fiscal year, there were at least $80 billion imports due to which the Pakistani rupee remained under pressure,” he said.
“The import bill, however, decreased during the months of March and June. During the tenure of the previous government, LC margin was given which did not make any difference,” he added.
“Letter of Credits (LCs) of more than $100,000 worth are subject to the approval of the State Bank of Pakistan (SBP),” he stated.
The finance minister also talked about the decline in imports in the month of July, stating that the data till July 18 was encouraging.
“Total imports in the first 18 days of the ongoing month are $2.6 billion. Energy imports have also declined this year. Today, Pakistan has a stock of diesel for 60 days,” he informed the media.
He also stated that there would be a decrease in fuel imports, adding it would affect the imports of the following month.
“The government wants to bring imports at par with exports and remittances. After the IMF agreement, money will come from the World Bank, Asian Development Bank (ADB) and the Korean banks,” said the finance minister.
“A friendly country will provide $1.2 billion in oil financing. Another friendly country will invest $1 billion in the Karachi Stock Exchange (KSE). Another friendly country has agreed to provide $2 billion on deferred payment for gas. Another friendly country has offered to give $2 billion SDR,” added he.
“At least $8 billion are likely to pour in during the current financial year,” he stated.