ISLAMABAD: Vice President (VP) of Pakistan Businesses Forum (PBF), Ahmad Jawad has said that for a country like Pakistan, with a trade deficit, strong rupee is a boon, not a bane.
Talking to Business Recorder, Jawad said Pakistan has for long been a victim of "a weak-currency fetish".
He cited the statement of Minister of Finance and Revenue, Shaukat Tarin before the Senate Standing Committee on Finance that trade with Afghanistan will now be in rupee, as Taliban government wants to save their dollar reserves, because they know the importance of a strong currency.
Jawad said it's a good move too for Pakistani importers to deal in Rupee. "In a currency-swap arrangement, countries that buy from each other pay with their domestic currencies at pre-determined exchange rates instead of trading in the U.S. dollar. This helps them save foreign exchange and thereby strengthen their domestic currencies".
He said the government must formed a task force with representatives from the Commerce Ministry, the State Bank of Pakistan, the Federation of Pakistan Chambers of Commerce and Industry, to draw up a list of countries with which Pakistan could consider doing its trade in rupees.
"I think trade with Iran and China too should be also in Rupee, as we have a substantial import from China," he maintained.
The PBF also said business community have no idea as to what is the real exchange rate needed by the State bank of Pakistan and which is the end point for depreciation of rupee. Though the exporters would get some benefit against their export proceeds but the overall economy would face a tough time as the cost has been rising and finally it would affect consumption, which is the main wheel to run the economy.
With the rupee crossing Rs167 against the dollar, the livelihood of the poor and middle class will become more difficult. Even the agriculture of this country is suffering. Due to free float policy by the Governor SBP now fertiliser prices are going on high side. "Farmer compelled to purchase DAP at the rate of Rs 7,000 per bag similarly nitrophos at the rate of Rs 4,000 per bag and so for in the case of urea."
"We are spending almost three dollars in imports for every dollar earned from exports and we cannot afford to keep imports this high," Jawad maintained.
At a time when the foreign currency reserves had crossed $27 billion, it clearly indicates the SBP was using exchange rate depreciation as a tool to make imports expansive but so far this mechanism had failed to stop rising trends in imports," he added.
"We appealed to the Prime Minister Imran Khan to take immediate action realizing the gravity of the situation as the appreciation of the dollar has led to fears that the rupee will depreciate further which is not only for national security but also for the economy," he said.
Copyright Business Recorder, 2021