In this day and age of international trade and globalisation, the importance of foreign exchange can hardly be denied. International trade is now the norm, the world over. Foreign exchange is central when it comes to meeting a country’s foreign currency requirement. Precautions like preventing an abrupt change in country’s nominal exchange rate are necessary as well as it has to be ensured that market investors are allowed to hedge their risks. Pakistan is one of those countries of the world where the GDP appears just about average, although growth in it could be expected if positive conditions prevail. however, it has been seen that in comparison the size of the foreign exchange market is yet small especially as compared to other countries with similar economic conditions.
The foreign exchange market here in the country gets its inflow by export proceeds, remittances and Foreign direct investment. Pakistan exports rice, wheat, leather, surgical equipment, fruits and different sports products. the loan received from IMF is for meeting current account deficit and does not add to the foreign exchange market. It is good to note that in order to facilitate these activities, laws have been amended to allow the foreign account holder to send the money without restrictions. The Pakistani current account holder can get receipts in dollars from foreign customers.
These changes in the market conditions are helpful but it is hoped that the government will do more to facilitate the traders and especially try to take such steps that can improve the situation so far as the foreign reserves are concerned. They are central to the economy.
Hafiz M Saud,
Lahore, May 27