Not long ago the central bank won great praise for achieving complete sovereignty in its operations and letting the rupee float freely in the currency market. But since then it has done practically nothing even as the currency collapsed and investor confidence sagged, to the point that now businesses are openly asking for some sort of clarity because they need exchange rate stability to enter into long- and even medium-term contracts. Yet the State Bank of Pakistan (SBP), in addition to saying everything is under control because reserves are healthy, isn’t saying anything that makes matters clearer at all. The reserves, appreciated as they are, aren’t really much help as far as the currency is concerned and a big part of them will be eaten up by debt repayment very soon anyway. And while the currency is very clearly in a downward spiral, with nothing to suggest a turnaround anytime soon, the production upswing that the government is so proud of will become increasingly difficult to finance because of constantly rising prices of inputs that need to be imported. Also, as the Islamabad Chamber of Commerce and Industry (ICCI) made very clear just the other day, now that the rupee has crossed the 168 threshold against the dollar, “it reflects deteriorating market perception about the country’s capacity to finance its foreign debt obligations.” Surely the SBP will no longer just be a quiet spectator as all our monetary policy gets us is imported inflation at a time when prices, especially food prices, are already uncomfortably and unjustifiably high. Governor Baqir came from the IMF with great promise, just when a few other high profile Pakistanis were also imported from other international behemoths. Yet now most of them have left and the economy’s outlook is hardly much to write home about; at least as far as the currency market, and its impact on production and prices, is concerned. This is not to say that the Bank must step in and provide support to the currency when market forces rule otherwise; just that it should always be present go give clarity to businesses in what is after all a very critical phase for the economy. *