The rupee is rapidly depleting and is in an existential zone. Its plight is owing to a host of factors such as a plummeting economy, erosion of exports, and last but not least perpetual political instability. It crossed another psychological barrier of Rs300 to a US dollar, and was seen trading in inter-bank exchange at almost Rs301. Whereas, in the open market it was out of reach even for Rs315 to a greenback, making it a writing on the wall that there is no future for the rupee if the trend continues unabated for a few more weeks.
This new calculation has brought a crisis of its own as the government is set to run into a policy quandary with the IMF. As agreed with the lender while approving a deal of $3 billion Standby Loan, the difference between exchange rates in the two markets should not surpass more than Rs4. But as of today, it has jumped threefold to more than 4%, or Rs14, compared to the 1.25% formula. This can come with new conditionalities with the Fund, leading to derailing of the existing understanding.
Read Rupee plunges to all-time low against US dollar
It is a settled equation that the economy is on the rocks, and the fiat is withering. Maybe Pakistan is on the path of countries that suffered supra-inflation and lost the economic clout for business. Flight of capital is another issue at hand as there is a substantial increase in demand for the dollar. Moreover, there are reports of businesses moving out, and no news of international investors being on a convinced pitch. This demands some instant intervention and if the modus operandi of governance is any criterion, there is not much to do to set in serenity.
The bleeding of the rupee will inevitably come with another increase in the prices of petroleum products this fortnight, and there are already rumours of the electricity tariff seeing an upward slap of Rs4 per unit. Life is increasingly becoming an enigma for commoners and salaried classes, and the fix seems to have no end in sight. Redrafting our entire arithmetic slate is the way to go, and this time around send to gallows the pampered species in our midst.
Published in The Express Tribune, August 25th, 2023.
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