AIRLINK 78.39 Increased By ▲ 5.39 (7.38%)
BOP 5.34 Decreased By ▼ -0.01 (-0.19%)
CNERGY 4.33 Increased By ▲ 0.02 (0.46%)
DFML 30.87 Increased By ▲ 2.32 (8.13%)
DGKC 78.51 Increased By ▲ 4.22 (5.68%)
FCCL 20.58 Increased By ▲ 0.23 (1.13%)
FFBL 32.30 Increased By ▲ 1.40 (4.53%)
FFL 10.22 Increased By ▲ 0.16 (1.59%)
GGL 10.29 Decreased By ▼ -0.10 (-0.96%)
HBL 118.50 Increased By ▲ 2.53 (2.18%)
HUBC 135.10 Increased By ▲ 2.90 (2.19%)
HUMNL 6.87 Increased By ▲ 0.19 (2.84%)
KEL 4.17 Increased By ▲ 0.14 (3.47%)
KOSM 4.73 Increased By ▲ 0.13 (2.83%)
MLCF 38.67 Increased By ▲ 0.13 (0.34%)
OGDC 134.85 Increased By ▲ 1.00 (0.75%)
PAEL 23.40 Decreased By ▼ -0.43 (-1.8%)
PIAA 26.64 Decreased By ▼ -0.49 (-1.81%)
PIBTL 7.02 Increased By ▲ 0.26 (3.85%)
PPL 113.45 Increased By ▲ 0.65 (0.58%)
PRL 27.73 Decreased By ▼ -0.43 (-1.53%)
PTC 14.60 Decreased By ▼ -0.29 (-1.95%)
SEARL 56.50 Increased By ▲ 0.08 (0.14%)
SNGP 66.30 Increased By ▲ 0.50 (0.76%)
SSGC 10.94 Decreased By ▼ -0.07 (-0.64%)
TELE 9.15 Increased By ▲ 0.13 (1.44%)
TPLP 11.67 Decreased By ▼ -0.23 (-1.93%)
TRG 71.43 Increased By ▲ 2.33 (3.37%)
UNITY 24.51 Increased By ▲ 0.80 (3.37%)
WTL 1.33 No Change ▼ 0.00 (0%)
BR100 7,493 Increased By 58.6 (0.79%)
BR30 24,558 Increased By 338.4 (1.4%)
KSE100 72,052 Increased By 692.5 (0.97%)
KSE30 23,808 Increased By 241 (1.02%)

The Pakistan Business Council (PBC), one of the country’s largest corporate advocacy platforms, warned that the ongoing rapid decline of rupee against the US dollar is “a perfect storm” for Pakistan.

Taking to social media platform X, formerly known as Twitter, it said that the exchange rate decline is attributable to a combination of factors.

This includes “premature relaxation of imports, weakening exports, diversion of home remittances to Hawala, which in turn feeds the strong demand for US dollar by smugglers and the informal/under-invoiced traders”.

“For the country, this is a perfect storm,” warned PBC.

The PKR has come under renewed pressure and is hovering at 305 level against the greenback in the interbank, whereas it has dipped below 330 in the open-market.

A caretaker administration is currently governing Pakistan, and is primarily tasked to steer the country through to a national election. However, it remains engulfed with acute political tension, as well as record high inflation and interest rates.

Meanwhile, the PBC in its note was of the view that the import pressure on reserves (and hence the value of the rupee) will ease fairly quickly as banks rebalance their open positions.

“Exports, however, are a function of global demand,” said PBC, and Pakistan’s ability to offer value in comparison with alternative sourcing countries.

“Global demand is unlikely to revive due to monetary tightening in the main markets that we serve.”

The PBC said that the withdrawal of Regionally Competitive Energy Tariffs (RCET) for exporters by the government will not help the value proposition, and customers are likely to maintain their demand for the “unreliability discount” when sourcing from what they perceive to be a risky country.

The body also questioned the role of State Bank of Pakistan (SBP) Monetary Policy Committee (MPC) when it comes to the management of the exchange rate.

“What then is the role of our monetary policy premised on high interest rates in managing the value of the Rupee?” PBC questioned.

The council said that with over Rs9 trillion cash in circulation, there is enough liquidity available to speculate in currency and gold.

“This Rs9 trillion is un-banked money, to its holders, neither bank deposit accounts, nor money market investment, however, high the returns may be, are irrelevant whist the rising value of the US dollar is an attractive proposition,” it said.

The PBC highlighted that overseas Pakistanis sending money through Hawala fetches over Rs15 more on the US dollar against remitting through banking channels.

“So long as smuggling is rife and attractive, the differential in inter-bank and Hawala rate will subsist and remittances will divert to the latter.”

The council also identified opportunities that need to be communicated effectively.

“With a bumper cotton crop and increased demand for Pakistani rice following the Indian export ban, the balance of trade could benefit by up to $3 billion per annum.

“That’s the size of the International Monetary Fund (IMF) Stand-By Arrangement (SBA). And that’s before any skillfully negotiated foreign investment by the Special Investment Facilitation Council (SIFC),” it concluded.

Comments

Comments are closed.

Kashif ALI Sep 01, 2023 03:34pm
Please, study the Lankan default model and learn how they strived to come back from default that their Inflation rate is the lowest since default. Instead of raising hue and cry, be an educated professional who keep his cool and focus on solutions. c'mon PBC!!!! (Don't act like rogue politicians and rodent traders).
thumb_up Recommended (0)
Maqbool Sep 01, 2023 06:32pm
It’s time to remove the Rs 5000 note from circulation. Only the caretakers can do it, our elected reps are too involved, but will the army support it for the good of the country wth 5 triilian in cash in circulation ?
thumb_up Recommended (0)
Mujeeb Khan Sep 01, 2023 08:17pm
whom shud we thank for this grave situation ? PDM or ..........
thumb_up Recommended (0)
Builder Sep 01, 2023 09:46pm
^^^^ entire nation....we are all corrupt, opportunist, hoarders....
thumb_up Recommended (0)
Kashif ALI Sep 01, 2023 10:28pm
@Mujeeb Khan, Look at the following facts: It took US$ 10-11 years to double in value from 75 to 150. (2008-2019). It remained range bound in 150s for next 2 years (2019-2021). From May 2021 till present (even less than 2.5 years), US$ doubled from 150 to 305. That is a collective national hara-kiri. Do you still require some proof? Apolitically speaking, the fiscal and economic gross mismanagement of PTI crushed the economy like never before.
thumb_up Recommended (0)
sarfraz ishaq Sep 02, 2023 12:02am
@Kashif ALI, why just blaming PTI ,who left us and runaway from this dire situation, everyone knew the traitors of this country but may be You're mentally blind can't see all that,its not your fault Allah bless you with a good sight
thumb_up Recommended (0)
KhanRA Sep 02, 2023 04:31am
@Kashif ALI, what yore hiding is that the vast majority of collapse in value happened AFTER PTI.
thumb_up Recommended (0)
KhanRA Sep 02, 2023 04:34am
@Kashif ALI, what you are hiding is that the majority of devaluation happened AFTER PTI, and that much of the rupees stability under PML came at the cost of depleting forex reserves due to the “Dar peg”
thumb_up Recommended (0)
Surfer Sep 02, 2023 05:53am
@Kashif ALI, Intellectual dishonesty at its best. PTI left the $ at 170, the drop to now an open market low of 330 happened since April 2022. Economies are a function of private enterprise, and the govt providing an enabling environment for those. Secondly, every economy has a capacity to pay its liabilities - those liabilities can continue growing, but a growing economy can sustain that. Pakistan's white economy went from $381B in 2022 to $341B in 2023 - that's a contraction of 11% in real terms from a growth of 6.5% just the year prior. Whose fault is that. Pakistan has lost the ability to pay its liabilities, and all the dominoes are now falling.
thumb_up Recommended (0)
Huzaifa Sep 02, 2023 05:23pm
Instead of highliting the issue propose a solution. No way the rupee will stop declining if we don't increase our export and reduce the taxation on private business. And I turn tax the f.... ING REAL ESTATE AND AGRICULTURE
thumb_up Recommended (0)
Imtiaz Ahmed Sep 02, 2023 07:21pm
@Mujeeb Khan, Nationalization of industries by Bhutto. Shsrifs ; Dry ports Hub of legal smuggling . Afghan transit trade now the new route of Iran's.
thumb_up Recommended (0)
Jodiabaazar.com Sep 02, 2023 08:45pm
Stocks are at record lows or not available at all. Factories, bakeries, everyone is suffering www.jodiabaazar.com is getting devoid of products. God help us all
thumb_up Recommended (0)