Speakers call for increasing foreign exchange reserves

Say efficient mechanism, prudent economic policies are need of the hour

LAHORE: Foreign exchange reserves are an important economic indicator that show the true picture of any economy and help attract attention of foreign investors. Although the current situation is better than the past, there still remains a lot of work to be done.

This was the crux of speeches delivered at a seminar on ‘Strengthening Foreign Exchange Reserves and Providing Lucrative Incentives’ held at the Lahore Chamber of Commerce and Industry (LCCI) on Tuesday.

The speakers said that efficient mechanism and prudent economic policies are the need of the hour to support Pakistan’s growing economy.

They said that the size of the foreign exchange reserves is markedly important now, especially in the post-globalisation era, due to increased global trade, capital flows and currency volatility.

They stressed that most of the foreign trade is done in US dollars, as a medium of exchange so healthy foreign exchange reserves are a pressing requirement.

During any crisis, foreign exchange reserves help the country absorb distress, related to such crisis. Foreign exchange reserves enhance the capacity of the central bank of the country to intervene in the foreign exchange market to manage exchange rate stability, they added.

LCCI Senior Vice President Amjad Ali Jawa said that Pakistan’s foreign exchange reserves had reached a historic level of $24 billion in October 2016.

“Though the situation is quite satisfactory, foreign exchange reserves could be increased further if we manage to control the trade deficit.”

He said that incentives should be given to Pakistani workers working abroad to encourage them to use only banking channel for remittances.

LCCI Vice President Muhammad Nasir Hameed Khan said hurdles hampering the smooth progress of business, in general, and promotion of foreign direct investment, in particular, should be removed.

Also speaking on the occasion LSE Financial Services Limited CEO/Director Asif Baig Mirza said that foreign exchange reserves add to the comfort of market participants; that domestic currency is backed by external assets.

It also helps the equity markets of the country with lesser country risk, better credit rating, more foreign portfolio investment and stable exchange rate.

Published in The Express Tribune, March 29^th, 2017.

Like Business on Facebook, follow @TribuneBiz on Twitter to stay informed and join in the conversation.