KARACHI: The Prime Minister Shehbaz Sharif has expressed serious concern over the continued slide of Pak Rupee against the US dollar and discussed the matter with representatives of exchange companies
The Prime Minister held a Zoom meeting with President Forex Association of Pakistan Muhammad Bostan Malik and asked the reasons of Pak Rupee depreciation against the greenback. During the meeting Federal Minister on Finance Miftah Ismail, Acting Governor State Bank of Pakistan (SBP) Dr Murtaza Syed, Minister Interior Rana Sanaullah and others were also present.
After meeting Malik Bostan informed that Prime Minister has expressed serious concern over the unstable exchange rate and urged for immediate steps to control the slide of Pak Rupee.
According to Malik Bostan, he has informed the Prime Minister Mian Shehbaz Sharif that the rising trade deficit, political instability and delay in release of one-billion-dollar tranche of IMF’s Extended Fund Facility (EFF) have largely contributed in the current fall of Pak Rupee.
He further clarified in the meeting that the exchange rate is being determined by the inter-bank market and the dollar rate in the open market will not fall till the decline in the inter-bank market. “Exchange companies are not responsible for rate hike as presently, commercial banks are increasing exchange rates and the free market follows the inter-bank rates”, he mentioned.
If the commercial banks will drop Rs. 1 in inter-bank, exchange companies will drop Rs 2 in the free market, he assured. “We (Exchange Companies) can control the exchange rate in the free market, but don’t have any powers for increase or decrease in dollar rate in the inter-bank market, where the commercial banks are controlling the rate”, he mentioned.
Malik Bostan said that political stability was being expected after the oath taking of Shehbaz Sharif as Prime Minister and the dollar rate significantly fell from Rs 189 to Rs 181 per dollar in the open currency market. However, the market turned to instability following the announcement of Islamabad sit-in on May 20 by former Prime and chairman PTI Minister Imran Khan.
In addition, due to rumours of further deprecation of Pak Rupee, the importers are opening more Letters of Credit (LC) for import, while the exporters are not bringing export proceeds, of which the supply of dollar has decreased, while, the demand of dollars has increased in the inter-bank market.
Malik Bostan suggested to the Prime Minister that the government should immediately impose ban on import of all luxury items for at least one year. At present, Pakistan’s monthly imports are about $6.25 billion and the country can save about one billion dollars monthly by imposing a ban on unnecessary imports of luxury items.
Pakistan can save $12 billion in a year by restricting imports and this huge amount can be utilized for the repayment of foreign debt without obtaining fresh borrowing from international financial institutions, he mentioned.
In addition, he suggested that a long-term policy must be prepared for the sustainable increase in exports and workers’ remittances to build the depleting foreign exchange reserves of the country.
According to Malik Bostan, Prime Minister Shehbaz Sharif has said that he will again hold a meeting on Zoom with representatives of exchange companies to make major decisions to stabilize the exchange rate.
The meeting will also be attended by the representatives of exchange companies Sheikh Alauddin, Zafar Paracha and Sheikh Mureed.
Copyright Business Recorder, 2022