JUL 20, 2018: Pakistan Industrial and Traders Associations Front (PIAF) chairman Irfan Iqbal Sheikh has demanded a high-level probe into massive devaluation of rupee by over 22% during the last six months.
He also demanded the State Bank to identify the reasons and share the findings with the business community. He said the Pak rupee has weakened by around Rs12 against the dollar from June 1, 2018 when the caretaker government assumed the office. The rupee slide has resulted in around Rs 1,200 billion increase in the country’s debt.
The PIAF Chairman while issuing a statement along with senior vice chairman Tanvir Ahmed Sufi and vice chairman Shahzeb Akram, was of the view that the sharp downfall in the rupee value had not only disturbed almost all sectors of the economy but also brought a new wave of price spiral that would not die down despite dollar’s retreat.
“Six rupee increase in dollar price in a single day was an unusual phenomenon for a country like Pakistan as the mafia involved in this affair made billions of rupees in a single day while on the other hand those who bought the greenback to fulfill their foreign commitments suffered a great loss.”
Chairman PIAF urged the government to take action against shortage of dollar in local market, besides controlling surge of dollar against rupee.
He said the depreciation valuation of one rupee against the dollar increases external debt by Rs 100 billion. He added the implications of depreciation are very serious on the budget deficit, inflation and on cost of doing business. He stated that it is too early to estimate the positive impact of rupee devaluation on exports as export orders will take longer time to materialize.
Irfan Iqbal said the illegal international transactions in dollar-denominations via Dubai are creating shortage of dollars in the Pakistani open market. The PIAF office bearers appealed to the government to direct the Federal Investigation Authority (FIA), Intelligence Bureau, Customs Intelligence and the State Bank of Pakistan to keep strict vigilance to control currency and bullion smuggling. They urged the SBP to immediately take notice of the situation which is causing panic in the currency market.
Meanwhile, the caretaker government has kick-started the process of seeking a bailout from the International Monetary Fund (IMF) to enable the incoming government to move along quicker if it chooses to exercise the option.
The growing deficit has pushed the country near a default-like situation. The country’s foreign currency reserves have dropped to an alarming level of less than two months of import cover. They stood at $9.06 billion on July 13, a four-year low.