KARACHI: Under the milieu of depreciation of domestic currency versus greenback, the prime export oriented and other export sectors of the country have felt brunt negatively, industrial people maintained.
The cost of deals done by the exporters and businessmen with their respective foreign counterparts have jumped manifold, executives of industrial associations have lamented.
If such situation in future would go unnoticed by financial managers in the helm of the government, rupee would go further down within next coming weeks, as demand of greenback may be created by importers requiring more dollars to pay for, foreigners withdrawing their investments and taking the dollars outside.
The stance of the government on economic front besides on other sphere of social and development projects are not new and nothing is different of what has been happening in past governments.
Only faces have been changed and no strategy or concerted plans to boost economy have been seen besides steps for restructuring the institutions.
The prime export-oriented industrial sectors have urged government to control surge of dollar against rupee. Government should take serious note of the situation as business community always in need of money to meet their export and input imports requirements.
Agha Saiddain, Ghulam Rabbani, Ibrahim Qureshi, Shakeel Ahmad, Sanaullah Khan and Qamar Qureshi executives of tanning, textile, business forum, agriculture sector, marble and minerals, economic forum and others segments of trade have observed widening current account deficit, excessive government borrowing, absence of foreign flows increasing oil imports and lack of foreign investment are the vital reasons for the sudden depreciation of domestic unit.
Pakistan’s rupee was overvalued by at least 20 percent and has a negative impact on the country’s exports. The local currency last week dropped the most in nine years amid rumours of devaluation due to surging trade deficit and shrinking exports of the country. The rupee hit its lowest level since 2013 by shedding value of more than 3 percent to 108.10 against US dollar. The country’s economy came under severe pressure due to surging trade deficit on the back of falling exports and a sharp increase in the import bill.
The trade deficit soared 43 percent to an all-time high of $32 billion in fiscal year 2016-17.
They observed that causes of depreciation of a currency are multiple which in combination push and pull the respective currency’s quotation in conjunction with other currency.
If there is more demand for dollar in Pakistan than the supply, domestic unit would depreciate.
Trade deficit surged 61 percent to $3.765 billion, according to latest data released by Pakistan Bureau of Statistics. The import bill during July-June 2017 period rose 21.6 percent to $53 billion. It is expected to reach over $57 billion in first month of fresh fiscal year 2018. In the 12 months through June 2017, the export dropped from $22.50 billion a year ago to $20.40 billion, putting pressure on the currency.
The devaluation always pushed inflation on higher side and made the common life miserable in past and this seems to be going happen again.
They advised government to take steps commencing trade between Pakistan and China in local currencies with special emphasis on greater Chinese investment in Pakistan’s lagging value-addition economic activities for making meaningful improvement in bilateral trade balance.
Published in Daily Times, July 13th , 2017.