Govt urged to control ‘dollarisation’

Businessmen call for swift measures to strengthen rupee

LAHORE:

Pakistan cannot afford a “dollarised” economy, therefore, the government should control dollar flight without any further delay, said Lahore Chamber of Commerce and Industry (LCCI) President Mian Nauman Kabir.

“Dollarisation is a situation when the local currency loses its stability as a medium of exchange due to hyperinflation or instability and the same is happening in Pakistan,” he said.

The rupee has plunged to Rs207 against the dollar in the inter-bank market. “This essentially means that the devaluation is around 6.5% in the last one month only,” Kabir said and attributed the situation mainly to the political uncertainty, rise in global crude oil prices and a burgeoning trade deficit, which surpassed $43 billion in the first 11 months of current financial year.

Since the industry heavily relies on the import of raw material, components and machinery, this devaluation has highly increased the cost of production.

“The government should take all possible measures to strengthen the rupee with renewed focus on import substitution and enhancing exports, besides creating an environment of political stability,” Kabir said and called for curtailing imports of non-essential and luxury items.

He cited that in the regional economies like India the currency had remained stable as the devaluation had been merely 0.3% in the last one month. “The currency has strengthened in China against the US dollar in the last one month.”

He feared that the sharp surge in dollar would jack up the input cost which would hit the export-oriented industries hard.

Published in The Express Tribune, June 17^th, 2022.

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