Planned erosion in exchange rate to hit common man: ICST
ISLAMABAD – The Islamabad Chamber of Small Traders (ICST) on Sunday said planned erosion in the exchange rate was to hit every person in Pakistan.
“The currency has been left at the mercy of IMF, exporters and currency dealers which amounts to playing havoc with the country,” ICST Patron Shahid Rasheed Butt said, and added, “A few months back, the government had decided not to let the market forces play with the local currency, but now it has allowed it which is amazing.”
He said that the demand of the exporters to devalue the currency to boost exports was based on unfounded assumptions as it gave a temporary relief, but it also inflicted heavy losses on the economy which was already fragile.
Shahid Rasheed Butt said that there should be a limit to the devaluation as it increased the cost of imports which were more than double of the exports. “It increases the price of imported raw material, slows growth rate and makes exports expensive,” he said, and added, “Devaluation also adds to the cost of debt servicing which is a major concern for the policymakers as it continues to grow to unsustainable limits.”
The business leader said that the country had been devaluing the currency to spur exports for the last forty years. “Devaluation has created a perpetual problem of trade and the current account deficit which was being tackled through remittances and loans,” he added.
He said that the government should not have accepted the demand of IMF and exporters for further devaluing the rupee. “The government had reacted sharply when SBP devalued the currency on July five that caused uncertainty in the market and worried business community,” he commented.
An inquiry was launched and a new governor of the central bank was appointed but now it had changed its policy which would start hurting masses within days, he predicted.