The weakening rupee

It is estimated that around six million dollars change hands between traders of Pakistan and Afghanistan daily

The sudden depreciation of Pakistani rupee against the US dollar is adversely impacting economic indicators. This is more concerning as the rupee was well placed after attaining the status of world’s best-performing currency in March. This slump is owing to a slip between the cup and the lip as Pakistan could not retain the stringent regulation on its current account deficit, besides letting imports swell for reasons of developmental proximity. This has hit the macro-economic indicators too severely and led to the nose-diving of rupee. The fact that a US dollar is trading for Rs166 approximately, after finding a berth at 162 for weeks and months, is a bad omen. To further deteriorate this rupee crisis is the revulsion in Afghanistan, which has set the demand for greenback surge to unprecedented limits.

This nervousness of the rupee calls for a comprehensive approach. It seems the entire ruling clique is busy chest-thumping at the change of guard in Kabul. None are attending to the vicious circle of demand and supply on the western borders, where informal economy is the order of the day. It is estimated that around six million dollars change hands between traders of Pakistan and Afghanistan on a daily basis; and as Kabul goes bankrupt in terms of greenback pouring in from Washington, the demand inevitably will circumvent Pakistani coffers. This is one of the reasons for the rupee going sluggish.

It is also a foregone conclusion that the government has no control over prices of essential commodities. Inflation is at 9%, and the sensitive price index has risen to 12%. There are mafias and cartels that hold sway over prices, and are free to manipulate them. The government is a hapless spectator for reasons of political exigency. From poultry and dairy to grains, and from fruits and vegetables to flour, rice and sugar, there is no price control — nor any checks and balances. It seems to be an abdicated territory for the government. Will the Prime Minister act and nail down the hoarders and rupee manipulators? Likewise, time to ban all non-essential imports and minutely monitor the rupee fall. Any further wait will be suicidal.

 

Published in The Express Tribune, September 6^th, 2021.

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