KARACHI:
The US dollar is increasing in value against the Pakistani rupee daily, which is harming local industries, businesses, and government management. One reason for the increasing value of the dollar is speculative buying. The ease of buying and selling dollars and consistent increase in value has made it an investment tool for people. Within the last few days, many people told me to purchase US dollars to sell them at a high rate in the future.
Considering that the sale and exchange of the Indian Rupee are banned in Pakistan, the government should temporarily ban the sale and exchange of dollars to regular citizens. The government should take strict measures to prevent citizens from trading or holding US dollars. It can offer an alternative investment option to locals such as buying and selling gold stored at the State Bank of Pakistan (SBP) or certain commercial banks. The value of the gold will determine the value of the gold investment certificate. Physical notes of each certificate can be issued to help investors easily buy and sell them.
This can help government curb speculative buying of US Dollars, reduce the dollar exchange rate, and maintain it. With an alternative investment option, the government can create a gold reserve at SBP for the gold investment certificates, which may help stabilise Pakistan’s economic position. Many countries have also tried to reduce currency speculation by reducing the number of currencies in circulation. Another option is a financial transaction tax, which entails taxing every foreign exchange transaction. Many countries have suffered severe destruction due to unregulated currency speculation; therefore, it is necessary to curb it.
Shahryar Khan
Peshawar
Published in The Express Tribune, February 1st, 2023.
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