Rupee recovery brings no respite from price hike

Traders, importers deny consumers benefits of decine in dollar rates

KARACHI:

Despite a notable and rapid appreciation of the Pakistani rupee, those grappling with the effects of inflation have yet to see a substantial improvement in their economic conditions. Traders and importers, who were quick to adjust prices upward in response to minor fluctuations in the dollar exchange rate, seem reluctant to pass on the benefits of a significant 20-rupee increase in the rupee's value to the general public. Regrettably, governmental initiatives to alleviate this financial strain have been conspicuously absent. As a result, the segment of the population bearing the brunt of inflation continues to suffer despite the strengthening of the rupee.

Economists are urging a multifaceted approach, combining policy-level measures with administrative actions, to stabilize the trajectory of rupee appreciation and ensure its positive impact is felt by the public.

The devaluation of the Pakistani currency has had a detrimental impact on people's purchasing power, but the artificial inflation exacerbated by hoarding and profiteering has made daily life increasingly challenging. Compounding these hardships are frequent government hikes in the prices of petroleum products, gas, and electricity, which have left the public feeling helpless in the face of this inflationary storm.

Interestingly, despite the rupee's resurgence and remarkable stability, prices of imported and locally manufactured products using imported raw materials have shown an inclination to rise rather than fall. Importers and vendors now justify maintaining current prices by citing existing stock levels.

The rapid recovery of the rupee can be attributed to robust enforcement efforts by federal investigative agencies against illegal currency trading and black market activities. In September, the rupee regained Rs45 against the dollar in the open market and approximately Rs20 in the interbank market.

Published in The Express Tribune, October 3^rd, 2023.