PIAF raises concerns at Pakistani rupee devaluation
The Pakistan Industrial and Traders Associations Front (PIAF) has said the fall of rupee value continued hitting the economy hard, as the cost of deals done by the businessmen with their foreign buyers has increased manifolds.
Besides 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, said PIAF Senior Vice Chairman Nasir Hameed and Vice-Chairman Javed Siddiqi in a joint statement
On the persistent decline of the rupee against the dollar, Nasir Hameed Khan said the rupee had plunged by 11 per cent against the dollar over the past six months while the value of other currencies in the region had declined by hardly one to two per cent in the last six months.
This indicates that the pressure on the rupee is consistently increasing, he said, stressing the need to devise a strategy on war-footing to increase foreign investment in Pakistan so as to stop the upward trajectory of the dollar.
Nasir Hameed said that the continuous increase in imports is fuelling the dollar's demand in the market, saying that there was a possibility of imports rising to $65 billion by the year's end, up from an earlier estimate of $61 billion.
Moreover, he added, the target for remittances from overseas Pakistanis, which was set at $29bn in June earlier this, was likely to be contracted to $28bn. However, if the approval of a $6bn loan package by the International Monetary Fund and the immediate delivery of $1bn on that account from the Fund could improve the situation, he said.
Vice-Chairman Javed Siddiqi urged the government to control the volatility of the rupee against the US dollar, as the industrial revival and economic growth are not possible without the stability of the local currency. He said that the Pakistani rupee continued its downward slide against the US dollar.
He said that the high import bill this year was enough to signal the market that the demand for the dollar was very high. PIAF Vice-Chairman observed that the market-based flexible exchange rate system, resilience in remittances and other factors can help contain the current account deficit in a sustainable range of 2-3 per cent of GDP in FY22. He said that the rising of the dollar is not logical despite the fact that the State Bank says Pakistan’s external position was at its strongest in 10 years with a 0.6pc current account deficit in FY21.
He emphasized the need to keep incentivizing export-oriented sectors in order to take the exports to the next level. He said that there is no denying of the fact that the government has been facing numerous economic challenges besides other internal and external issues and problems during the last three years. He said that the textile industry has been maintaining the top position in exports and is the lifeline of Pakistan's exports, which would be further increased after the decision of the government’s relief to this sector. With the resolution of hampering issues, he hoped the share of export could go high further in FY 2021-22.