LAHORE: The Lahore Chamber of Commerce and Industry Friday urged the government to take immediate measures to arrest dollar flight against the Pak rupee.
In a statement, LCCI President Mian Nauman Kabir, Senior Vice President Mian Rehman Aziz Chan and Vice President Haris Ateeq said that the State Bank of Pakistan should take stringent measures to control the continuous rise in dollar price.
They added that exorbitant devaluation is taking place as the inter-bank dollar rate has plunged to over Rs 200. This essentially means that a devaluation of around 6% has taken place in the last one month only.
The LCCI office-bearers said that the main cause of the devaluation in recent times has been the political uncertainty, rise in global crude oil prices and a burgeoning trade deficit which has surpassed 39 Billion Dollars in the first 10 months of the current financial year.
They said that since our Industry heavily relies on imports of raw materials, components and machinery, this devaluation has resulted in an increase in the cost of production. The new Government should take all possible measures to strengthen the local currency.
There needs to be a renewed focus on import substitution and enhancing exports besides creating an environment of political stability. The imports of non-essential and luxury items should be curtailed.
LCCI President Mian Nauman Kabir said that trade in local currencies, particularly with China, will help Pakistan to end the burden of relying on USD in bilateral trade and to bring down the trade deficit.
The LCCI office-bearers said that Pakistan’s mutual trade volume only with China is more than USD 13 billion and if the country makes currency swap agreements with regional countries in general and with China in particular, it will significantly lift pressure off the foreign exchange reserves and dependency on the dollar will be decreased.
The LCCI office-bearers said that historic devaluation in Pak-rupee has been recorded against the USD during the ongoing financial year. They said that trade deficit is one of the major reasons of rupee devaluation.
They said that the currency swap agreements with regional countries will help make Pakistani currency stronger as weak Pak-rupee against the USD has become a serious matter of concern for the economy. They said that Pak-rupee devaluation has made the imports of raw materials and other necessities for the industrial sector more costly.
The LCCI office-bearers said that a stable currency is crucial to achieve real economic growth. They said that unfortunately, Pakistani rupee is continuously falling against dollar which has had negative impacts on the national economy. “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”, They added.
They 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.
Copyright Business Recorder, 2022