Don’t blame the media

The State Bank of Pakistan (SBP) has blamed newspaper articles and “columnists” for the most recent speculative pressure on the rupee. This came after the rupee’s value had earlier been allowed to fall in the wake of currency devaluation by China and other emerging markets in August. Back then, the rupee’s competitiveness was maintained as Pakistan’s exports were falling and the government was worried over the lack of debt-free foreign exchange inflows. The view then was that the rupee needed to fall further and this opinion did not come from columnists. Officials of exchange companies, a former finance minister and exporters, all thought the rupee’s value needed to fall. Demand from Hajj pilgrims, the recent earthquake and the view that foreign exchange reserves would soon be under pressure after repayments to donors began would have seen the rupee stuck in a spot of bother before too long.

But the SBP is now adamant that the pressure on the rupee stemmed from the media. It says that there has been “reference to reports by international rating agencies ... ignoring the strengths of the economy”. The central bank further says that articles highlighted just one aspect of the debt dynamic and did not talk about the overall macroeconomic stability. Of late, there have been reports highlighting our foreign exchange position, which have pointed to the contribution of debt in increasing the reserves. Blaming newspapers for reporting facts implies that the bank believes that investors blindly follow the media without using their own intelligence. The SBP, in its own report, had earlier said that a solution was required to strengthen Pakistan’s debt-servicing capacity through “real earnings from exports and/or remittances, rationalisation of imports, and curbing smuggling”. Perhaps, the SBP’s own report caused speculative pressure on the rupee. Blaming the media here is incomprehensible. The central bank needs to give cogent arguments for developments on the economic front, and not look for scapegoats.

Published in The Express Tribune, November 14^th, 2015.

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