Business

Finance minister’s claim ‘unrealistic’

Dar’s aim of bringing dollar below 100 criticised.

Our Correspondent December 05, 2013

Dar announced the government’s intention to bring the dollar back to the Rs98-mark after it reached an unprecedented level of Rs108. ILLUSTRATION: JAMAL KHURSHID

KARACHI: Finance Minister Ishaq Dar could be forgiven for making as tall a claim as he did when he said that dollar would be brought below the Rs100-mark. His statement, which refreshed memory of former prime minister Raja Pervez Ashraf’s claims that load-shedding would end in the country, also drew flak from various quarters as not only the opposition but various analysts also jumped in.

The reaction comes after Dar announced the government’s intention to bring the dollar back to the Rs98-mark after it reached an unprecedented level of Rs108. Heavy debt repayments to the International Monetary Fund have dented the central bank’s reserves, which have declined significantly, putting severe pressure on the rupee.

Given the situation, Alternate Research Investment analyst Umesh Kumar, however, was of the opinion that the finance minister’s statement was aimed at ending speculation in the currency market. “We don’t foresee any significant inflows that could stabilise the rupee,” Kumar said, adding that pressure will rebuild on the rupee from January onwards due to significant outflows.

He added that the rupee will keep its current level only if one-off inflows, like the spectrum auction, materialise.

“In our opinion, it’s simply impossible to bring the dollar to Rs98.”

Meanwhile, Global Securities research analyst Umair Naseer termed the finance minister’s statement as ‘unrealistic’.

“The value of dollar cannot be kept artificially low,” said Naseer. “It is determined by market forces, which are clearly beyond the control of the finance minister right now.” He added that the finance minister made a ‘political statement’ that does not have any economic justification.

Published in The Express Tribune, December 6^th, 2013.

Like Business on Facebook, follow @TribuneBiz on Twitter to stay informed and join in the conversation.

COMMENTS (1)

gp65 | 10 years ago | Reply "Kumar said, adding that pressure will rebuild on the rupee from January onwards due to significant outflows". The crisis will be postponed to January only if the 2nd tranche is approved and comes trough timely. Considering the government is underining FBR's ability to collect taxes through various SROs and schemes and is failing to take necessary policy actions to build up reserves for example increasing interest rates and allowing gradual controlled depreciation - it is squite possible that the 2nd tranche may not come through in December. There is a reason the release of tranche has been made conditional to review and approval to Pakistan's reforms.

Replying to X