THE rupee has taken a plunge. This was but expected. Our oil import bill - swollen not as much from an increase in the quantum of the stuff that we are guzzling but from what we have to pay for it - is dragging our currency down in favour of the greenback. The last time the currency was declining like this was when Pakistan tested its nuclear device and then in the wake of September 11. A barrel of crude oil costs $126.2 now. Oil, even at our special OPEC rate, having been procured earlier on, the newer highs indicate that the oil import bill is going to rise yet further. It was this alarming situation that forced the State Bank of Pakistan to ban export of certain popular currencies. The SBP insists that there were certain irregularities there that needed to be corrected; and, of course, a negative sentiment that needed to be offset. A revaluation of currency, therefore, is something the central bank would never say it is doing. As per SBP policy, the Governor reiterated that it is not the Bank's lot to fix exchange rates; that's what the free market is for. True, but as everyone knows, the SBP does "play the market" in an effort to buoy the currency. And it has done a decent job of keeping it stable for five years. Though it does this out of a desire to shield the public in our import-based economy from further inflationary pressures, whether this is good, sustainable long-term policy is another issue. The rupee is estimated to be much above its actual value. Keeping it here would probably not bear well in the long run. There have been feelers from the SBP itself that previous levels would probably not be returned to. The whole currency equation usually does boil down to a trade off between the trade deficit and the inflation rate. But the current debate seems to transcend that trade-off. A decision to let the rupee slide might not be choosing increased exports over low inflation but to shield us from a higher, sharp bit of inflation in the future, when buoying it further would not be an option any more.