LAHORE: The Lahore Chamber of Commerce & Industry has feared that the economic cycle will be disturbed badly and the investors will be scared off if the rupee devaluation against dollar continues. In a statement, LCCI President Mian Nauman Kabir said that a stable currency is crucial to achieve real economic growth.
“When currency is losing its value and has a weaker outlook, not only foreign investors would stop coming in but the local investors would also hesitate to put in their capital in new ventures”, Mian Nauman Kabir added.
The LCCI president said that the devaluation of well above 10 percent has taken place since the beginning of this financial year (July 2021). Since our industry relies on imports of raw materials, components and machinery, this devaluation has resulted in an increase in the cost of production and the widening of trade deficit.
He said that to control devaluation, there is a need to curtail imports of non-essential and luxury items, use state bank interventions to control exchange rate, work on currency swap with China from where our imports are around 13 billion dollars and focus on a concrete strategy of import substitution and enhancing exports.
He said that the currency devaluation always lead to lower industrial productivity as the imports goes more expensive, rise the inflation, exporters have less incentives to cut production cost, reduce the purchasing power of the common man, rise in import bill and will pose serious challenges for the economy.
Mian Nauman Kabir said that continuous surge in dollar price is increasing the import bill as all imported oil and cost of raw material and other essentials is going up.
LCCI Senior Vice President Mian Rehman Aziz Chan said that surge in the prices of the greenback during the last few months is not only jacking-up the cost of doing business but is also eroding the profit margins.
LCCI Vice President Haris Ateeq said that the State Bank of Pakistan needs to ascertain the factors weakening the value of rupee and check the possibilities of undue speculations and malpractices in the operation of foreign exchange markets in Pakistan. This will help stabilize rupee and restore the confidence of the business community.
The LCCI office-bearers said that an unchecked increase in the dollar rate will multiply the cost of doing business and badly affecting the industrial, manufacturing and agriculture sectors as Pakistan has to import fertilizers, food items, oil, machinery and industrial raw material. They said that the government should take immediate measures to arrest further devaluation of rupee to avoid more damaging consequences for the economy.
Copyright Business Recorder, 2022
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