KARACHI
Government mishandled the devaluation and now dollar is getting out of hands; the 32 percent devaluation of rupee against dollar in the last 3.7 years of the incumbent government.
In this regard it’s need of the hour that Parliament should intervene and may summon Governor State Bank and seek concrete explanation from him on unjustified devaluation said Vice President of Pakistan Businesses Forum (PBF) Ahmad Jawad.
Talking to Presser, he said the weakening currency impacted the consumers’ purchasing power as devaluation fuelled inflation. ‘Took from Rs 123 against the US dollar in August 2018 after sworn as PM to Rs 182.20 against the US dollar till March 29th 2022’.
One must understand with devaluation, there is inflation, when there is inflation, your disposable income goes down, which affects consumption behaviour and spending power. There is a decline in aggregate demand, which is why there is an economic slowdown.
Ahmad Jawad also said our monetary policy may effects day-to-day life of the common man which includes its effects on poverty, inequality and other social out comes. SBP, therefore, needs to assess, consider and communicate the side effects of monetary policy to the public for greater transparency, as well as to the government in order to align fiscal and regulatory policies to counter these unintended consequences.
Today State Bank of Pakistan reserves stood around at 16 billion dollars, two billion dollars are on the way of the IMF trans, Chinese debt is going to rescheduled but still exchange rate at 182 against one dollar; even current account deficit shrinks to $0.5 bn.
But still country’s economic team were forced for depreciation from international donors and it’s nothing related with the fundamentals and its one of the international agenda to weak Pakistan economically, as strong currency may impact the country economic outlook.
“Now, Parliament of this country should understand where we are heading in rupee? The appreciation of the rupee is inevitable for the country. Until and unless we can’t do we will remain in the viscous circle of the inflation and keep enjoying the sky rocket rates of every commodity from automobiles sector to food items”.
Similarly in automobiles sector deprecation supported much of the country automobile players. They increased their prices of about 72% regardless their assembly plants in Pakistan. Only few parts have to be imported.
On the other hand the cost of essential medicines had also risen. Even the prices of Active Pharmaceutical Ingredient (API) of the common medicine, which is imported from China over the past years owning to rupee depreciation have increased manifolds.
He openly viewed the recent devaluation of the currency was dictated by the IMF through prior actions and it has nothing to do with macroeconomic fundamentals. However the regional currencies versus the US dollar shows that the Pakistani currency experienced massive depreciation compared to others.
The Indian rupee stood at 75.39 against a US dollar. The Indian rupee stood at Rs70.09 against the US dollar in 2018, Rs73.66 in December 2019, Rs74.53 in March 2020 and Rs74.57 in April 2021.
In the case of Bangladesh, the Bangladeshi Taka stood at 85.76 against the US dollar and it hovered around 84 to 85.9 on average over the last two years.
Even durning the Musharraf-Shaukat Aziz regime between 1999 and 2007, the country’s currency remained largely stable and hovered around Rs60 against a US dollar. When the PPP-led regime came to power in 2008, the rupee depreciated as a result of a rising current account deficit and slid to Rs80 just in a few months.
Then, the rupee further adjusted against the dollar in a gradual manner after Pakistan joined the IMF program and remained around Rs90 against the US dollar from 2008 to 2013. In June 2013, the currency stood at Rs98.5 against the US dollar.
Then, the PMLN came to power in 2013. In November 2013, the Pakistani currency stood at Rs107.5 against the US dollar. Former finance minister Ishaq Dar’s policies brought the rupee down to an average rate of Rs98 against the US dollar in June 2014.
The Pakistani rupee remained stable at Rs100 in August 2014 while it adjusted slightly and settled at Rs105 against the US dollar in 2015-16 and 2016-17. Then, former finance minister Miftah Ismail allowed adjustment of the rupee against the dollar and it nosedived to Rs118 against US dollar in June 2018 on the pressure of the big houses.
I still remember former finance minister Ishaq Dar always turned down the depreciation request when Federation Chambers requested and he stated “it’s a mother of all evils and if I go for depreciation it never comes back”. Now what’s worse in this entire state is that no one is willing to take the responsibility and take concrete measures to counter the situation; he concluded.
