Dar urged to stop rupee depreciation

Businessmen say high policy rate compared to region not smart for industrial growth

KARACHI:

Tuesday, urged the depository financial institution of Pakistan to adopt an associate accommodative financial policy stance, asking the finance minister to fulfil his commitment of bringing the rupee down to its real value, reducing the policy rate and curbing inflation. Talking to The Express Tribune, Pakistan Businesses Forum (PBF) Senior Vice President, Muhammad Riaz Khattak explained that this unprecedented inflation and high mark-up rate has drastically reduced personal sector borrowing throughout the primary quarter of these 12months.

“The government calculated the economic process rate to be within the range of 3% to 3.5%, whereas international agencies predict it will be as low as 2% to 3% for FY2023, amidst the highest key policy rates within the region,” he said. “It is hard-to-please competitive interest rates at the regional countries’ level but the SBP’s stance of keeping the financial policy rate high compared to the mark-up rates from China, India and Bangladesh is not smart for industrial growth,” added Khattak. “The current SBP policy rate is 15%, whereas inflation in September was over 23% compared to 27% in August, that shows the important rate is negative with a good margin,” he said.

The Union of Small and Medium Enterprises (UNISAME) President Zulfikar Thaver called on Dar to take notice of the dollar-rupee parity, endorsing the finance minister’s view that the value of the rupee against the dollar was not more than Rs200. “UNISAME experts have reiterated that the value of the rupee vis a vis the dollar is Rs190 according to the formula of the price of gold and dollar in the international currency basket,” explained Thaver, adding that, “However, a cushion of Rs10 for demand and supply should be allowed and the rate of Rs200 should be fixed to bring about stability, feasibility and cost calculations for imports and export be realised.”

“The finance minister has stated many times that the value of the rupee against a dollar is not more than Rs200, Therefore, it would be wise to fix the rate and stop the mafia from creating shortages to determine the rate,” said Thaver. “With the help of regulating agencies, Dar should act aggressively against the mafia of exchange dealers who are encouraging people to buy dollars, making it look like a parallel currency,” advised the UNISAME president.

The PBF SVP urged the finance minister to provide discounts for the exportsector by taking friendly financial measures and maintaining a lower markup rate. Khattak, however, appreciated the energy tariff relief being given to the export-sector, and expressed the need for an equal form of relief particularly for Small and Medium sized Enterprises (SMEs) to provide a cost-effective business environment. Chairman of the PBF KPChapter Umer Masoodur Rehman said, “The central bank should announce an initiative related to loans for SMEs, particularly in floodhit areas.” Rehman further explained that the current account deficit and the rising policy rate could be the death of Pakistan’s economy.