Traders and industrialists have expressed concern over the devaluation of the Pakistan rupee against the US dollar, saying that the local currency's fall has far-reaching implications including increasing the cost of production.
Lahore Chamber of Commerce and Industry (LCCI) President Mian Tariq Misbah, while talking to a private TV channel, said exporters were happy with the appreciation of the dollar, but the local industry is dependent on imported raw material, urging the government to take notice.
“The survival of our local industry would become very difficult if the trend persists,” he said.
LCCI Vice President Tahir Javed Chaudhry, said that the continuous rise in the value of the dollar is also increasing the debt burden on the government. Consequently, the citizens would suffer due to higher inflation.
The currency has lost over 5% since July 2021 alone, and has been on a downward trend for over four months as a heavier import bill and widening current account deficit take their toll.
'Demand-side pressure' drives Pakistani rupee to 12-month low
KASB Securities Managing Director AH Soomro said that if the deficit widens further, PKR could fall to 170 against USD, adding that the economy 'overheats' when the discount rate is at 7%.
“Trade deficit touches $4 billion in August. Exports growth is not enough. Repeatedly emphasise our economy ‘OVERHEATS’ at 7% policy rate. PKR near Rs 170/$ is a possibility but not a solution,” said Soomro in a tweet post.
He said that the government needs to impose an 'export emergency', impose tariffs on luxury imports, and adjust the discount rate.
The country’s trade deficit also ballooned by 133% to $ 4.055 billion in August 2021 from $ 1.740 billion in August 2020.
Exports posted a month-on-month negative growth of over 3.5% to $ 2.257 billion in August 2021 as compared to $2.340 billion in July 2021.
Muzammil Aslam, CEO at Tangent Capital, also expressed concern over the rising imports.
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