Businessmen have suggested that the government should adopt a fixed exchange rate regime for 15 days, in contrast to the existing floating exchange rate, to control the economy as the country can no longer afford sharp depreciation of Pakistani rupee.
Acting FPCCI President Suleman Chawla, in a statement, warned that there was no other way than to raise petroleum and electricity prices even further if the dollar continued to strengthen and was sold above Rs230, as observed in the inter-bank market on Monday.
“The government must fix the dollar rate for 15 days to cope with the situation,” stressed Chawla. “We, as a nation, do not have many choices and the government must act now decisively.”
Pakistan Yarn Merchants Association (PYMA) Chairman Saqib Naseem expressed disappointment over the State Bank of Pakistan’s (SBP) negligence and the lack of effective measures to stop the continued increase in the value of US dollar, saying that the soaring dollar put SMEs, industries and businesses at risk.
He demanded that the SBP take concrete steps to stabilise the currency as businesses and industrial activities were badly affected, especially small and medium enterprises (SMEs) were facing high financial losses.
Depreciation of the rupee increased the cost of doing business due to which the business and industrial community was facing major challenges, he cautioned.
“Altering the free float exchange rate system is not possible because the current system is market driven,” remarked Dr Abid Qaiyum Suleri while talking to The Express Tribune. “It depends on the demand and supply of dollar.” He was of the view that the SBP could control the situation artificially by injecting dollars into the market from its reserves.
“SBP provides dollars to commercial banks to create equilibrium. However, today we have dollar reserves for import bill of only five weeks,” he said.
Finalisation of an IMF deal, which was expected in a couple of weeks, would provide some relief, he pointed out.
In the current system, it would not be possible for the SBP to intervene in the market as the rupee was depreciating fast, Suleri said.
Chawla emphasised that all gains on the back of a substantial decline in international oil prices over the past few weeks would be nullified as the government had no buffer to pass the relief on to the masses due to further rupee weakening.
The acting FPCCI chief maintained that businessmen and industrialists of entire Pakistan were in shock and awe over the government’s economic mismanagement, maladministration, absence of prudence and lack of vision, as only keeping the exchange rate stable in the vicinity of Rs190 would have enabled the government to reduce petroleum prices by at least 5%.
It would have provided breathing space for the businesses and the economy alike, he added. Chawla noted that despite the bloodbath in the forex market, the government had failed to appoint a regular SBP governor, which has rendered the central bank a rudderless ship.
He reiterated the demand of the apex body to appoint a competent, business and growth-enthusiastic SBP governor at the earliest to help eliminate speculative trading, barrage of misinformation and scarcity of dollar for the importers.
Sindh and Balochistan Region Vice Chairman Muhammad Junaid Teli said that the high dollar value was affecting those businesses and industries that largely relied on imported raw material to sustain production activities. “This has negatively impacted exports.”
Saqib Naseem demanded that the SBP take practical measures to stabilise the rupee and prevent its further fall to save the industries, especially SMEs, so that the cost of production could be reduced.
Published in The Express Tribune, July 26th, 2022.
Like Business on Facebook, follow @TribuneBiz on Twitter to stay informed and join in the conversation.
COMMENTS
Comments are moderated and generally will be posted if they are on-topic and not abusive.
For more information, please see our Comments FAQ