Rupee slumps to 112 per dollar
ISLAMABAD – The devaluation of Pakistani rupee against US dollar continued on Thursday and the exchange rate crossed 112 figure against the dollar in the open market despite the claims by State Bank of Pakistan to take necessary measures in this regard.
In the open market, the rupee is more disturbed and being disgraced when it is submitted for exchange against American dollar while the same situation is for inter-bank change.
State Bank of Pakistan is just issuing statements that it is monitoring the market, but according to latest reports, the SBP has not taken any action to stop the devaluation of the rupee and the government has not even responded to the present devaluation of the rupee.
The money changers, who deal with the sale and purchase of the dollar, are of the view that uncertain market situation is going on due to lack of any action taken by the government to stabilise the worth of the rupee against the dollar. They were of the view that government wants to show increase in the figures of export using the devaluation of the rupee.
Parliamentary Secretary for Finance in the National Assembly Rana Muhammad Afzal in an interview said the government has taken the decision to devalue rupee against the dollar on the demand of business community which deals in export business as they were demanding that let the market adjust the exchange rate without the interference of the government. He argued that change of exchange rate will also discourage the import of costly imported things as the prices of these imported commodities will be high after the change in the exchange rate.
Staff Reporter from Lahore adds: The dealers stated that exchange rate is now closer to the equilibrium.
They said the IMF had proposed the government to devalue its currency by 16 percent to Rs120 a dollar. However, the government agreed for five to six percent.
They said that those who accepted the demands of IMF to devalue local currency should have also considered the national interests as the fragile economy facing twin deficits cannot withstand such massive shocks. They said that State Bank should not delay an announcement of the exchange rate otherwise imports of many necessary items would be deferred resulting in another crisis.
Businessmen flayed the SBP for not removing the price cap and warned that speculators were active in the market, which could make the situation out of control, resulting in alarming price hike. They said the country was dependent on imports and the prices of imported items would increase by at least 15 percent, as importers were going to face increased shipping and port charges. They said that major victims of the devaluation have been importers whose business is suffering because of fluctuations in the exchange rate. They said that there should be a limit to the erosion in the exchange rate so that masses can be saved from looming flood of inflation.