KARACHI: President Karachi Chamber of Commerce & Industry (KCCI) Junaid Esmail Makda, while expressed deep concerns over serious devaluation of rupee against dollar, said that dollar has risen sharply to all time high of Rs 134 which has to be controlled otherwise, it will have a devastating impact on all segments of society, particularly the middle and lower segments of the society, besides making the poor more poorer due to unbearable inflation.
In a statement issued here Tuesday, President KCCI said that the State Bank has devalued Pakistani rupee from time to time during the last six to eight months and the rupee plunged terribly against dollar on Tuesday in response to government’s decision to rush towards the IMF.
“We fear that the rupee may fall further in the coming months keeping in view Pakistan’s dwindling foreign exchange reserves”, he said, adding that such abrupt devaluations in the past brought about economic distress, which lasted for several years. Currency devaluation for a country like Pakistan will have negative economic implications in the long run, he opined.
Junaid Makda further elaborated that although the exporters will be happy to see rising value of dollar and the country’s economic indicators will also display some improvement in exports but this increase can only be attributed to dollar value as the export volume remains the same, in fact, our exports have descended sharply to many destinations around the world because of rising cost of doing business. “It must be kept in mind that the rising dollar would lead to costlier imports and the exporters will also bear the brunt due to rise in cost of imported raw materials, pushing the economy into further deep crisis”, he cautioned.
He said that despite so many measures taken to discourage the imports including the imposition of Regulatory Duty on many items, Pakistan’s imports remain inelastic and a weaker rupee will not help. Mostly, they consist of raw materials (petroleum, chemicals and metals), intermediate goods or machinery. Any devaluation would increase their cost thus making Pakistani exporters less competitive.
Junaid Makda said that it has taken almost 10 years to rebuild investor confidence to an extent as foreign investors are gradually making a comeback. If the currency is devalued, it would send a negative signal to potential investors.
President KCCI further warned that the depreciation will terribly affect the lives of the masses as it will increase prices of all essential items and result in sky-rocketing inflation that would eventually lead to higher interest rates which may surge to double digit.
He advised that the Federal Government to take measures to stop further devaluation of rupee against dollar before it’s too late. Instead of approaching the IMF, steps have to be taken to create an enabling business environment which is the only way forward to pull the economy out of crisis, he added.