Businessmen have called on the government to review the free-floating dollar policy. The depreciation of the rupee beyond accepted norms and the demand-supply concept remains a matter of pressing concern for the business community.
The Chairman of the Korangi Association of Trade and Industry (KATI), Salman Aslam, expressed concern about the price of the dollar rising above 233 rupees in the open market.
He said that “the price should have been reduced after the country received assistance from the International Monetary Fund (IMF) and other friendly countries due to the stabilization of foreign exchange reserves and the actions of the Bank of State”.
“However, after a few days, the value of the dollar started to rise again, which is hurting the economy. In the current situation, the increase in the value of the dollar shows that smuggling is still going on and government measures to address this situation are not proving beneficial,” he noted.
“We are witnessing a dollar dilemma,” said Union of Small and Medium Enterprises (Unisame) chairman Zulfikar Thaver.
“The depreciation of the rupee beyond accepted norms and the demand-supply concept is of serious concern. This increases the landed cost of raw materials and imported parts and calls into question the feasibility of several units,” he lamented.
“The free-floating dollar policy should be revised to address food security challenges after the recent floods,” Pakistan Businesses Forum (PBF) Chairman Usman Zulfiqar said.
“The dollar is appreciating again against the rupee, which must be controlled now. This abnormal volatility would create more chaos in the ranks and records of the business community. Despite the resumption of the IMF program, the local currency remains unstable and weak,” he said.
“Markets had already priced in the IMF lending facility when the exchange rate strengthened by 10.7% to Rs 213.9 in interbank trade on August 16 from an all-time low of nearly 240 Rs towards the end of July. It could have maintained this level if the Gulf countries had fulfilled their commitment to provide $4 billion in safe deposits,” he added.
“The main reason for the current difficult situation is the freedom given to exchange companies which use Hundi and Hawala and which also encourage large investors to buy with their undeclared income and to sell dollars by pushing the exchange rate for winnings,” explained Zulfikar Thaver.
“Secondly, Pakistan is burdened with massive buying by Afghan traders who are buying dollars in the Pakistani open market and under-invoicing from here. Afghan traders are very active in our markets and instead of buying their currencies in Dubai or other free ports, they just buy from our exchange offices,” he explained.
“The government must discourage the smuggling of goods from Afghanistan and Iran. Accordingly, they should set up checkpoints on the roads that would serve as roadblocks for illegal transactions across borders,” Thaver added.
Usman Zulfiqar noted that “Pakistani electricity and gas tariffs for the textile industry remain the highest in the region despite RCET tariffs. The general industrial tariff remains at 0.15 USD/KWh, twice that of Vietnam and 1.5 times higher than that of Bangladesh and India. Similarly, Pakistan’s textile industry faces the highest gas/LNG tariff in the region”.
Published in The Express Tribune, September 10e2022.