When Finance Minister Ishaq Dar tells businessmen to unload dollars and buy rupees, he is not just trying to talk up the rupee, or using his position as the man who oversees the government’s control mechanism, but putting his professional credibility as an accountant at stake. While ringing alarm bells for those who remember all too well PMLN’s disastrous freeze of the forex accounts, he seemed to be suggesting that international economic factors are leading the revaluation of the rupee — upwards. When he said that the recent inclusion of Pakistan in the EU’s GSP Plus scheme should lead to the USA get maximum access to the US market, he was referring to one factor that would help the rupee. Another factor in favour of the rupee, is the IMF’s expected grant of the second tranche of its Extended Fund Facility to Pakistan. This would curb the demand for dollars by the government for repayment of the previous IMF package. Also, by exporting to Europe, and earning in euros, the IMF could still be paid directly, because its loans are denominated in Special Drawing Rights, so there will be no need to convert them into dollars.

However, Senator Dar should not rely so much on external factors for the defence of the rupee. It is significant that he made this statement to APTMA, because it not only consists of Pakistan’s biggest exporters, but also of those who have done most over the years to reduce the value of the rupee, in order to cheapen exports. These are also the people who hold foreign exchange, including the dollar, in large quantities. If Mr Dar wants them to put their holdings onto the market, it will be to help prop up the value of the rupee, and not because the value of the rupee is in and of itself about to rocket.

However, the government should not fall into the trap of trying to defend the rupee by those means, because in the end, the strength of a country’s currency will depend on how well its economy performs. True, there are issues of an energy shortage and law and order, not to mention the effects of official over-regulation. However, if Mr Dar and the government take action to overcome these difficulties, there is every reason for Pakistan to attract investment, and for its economy to do well. In that case, there is every reason for the Pakistani rupee to increase its value. But the wishful thinking demonstrated during the speech will get us nothing and take us nowhere.