REGARDLESS of the firm action taken by the FIA against the illegal currency business, pressure on the exchange rate has refused to ease out as dollar reached a record high of Rs 181.3 in the open market on Friday.
Already there has been more than thirty percent devaluation of rupee over the last three years which is one of the highest devaluations of local currency in the country’s history.
This free fall of rupee is increasing the risks of economic instability.
Already the price hike of essential commodities has overburdened the people and dented the popularity of sitting government.
This further depreciation of exchange rate will result in higher inflation, public debt and debt servicing.
Given our enhanced dependence on imported fuel, its prices will also further go up and probably beyond the reach of common man if this trend was not checked.
In an interview, DG FIA Sanaullah Abbassi said that during this month alone the Agency arrested 158 people and seized local and foreign currencies worth Rs 300 million across the country in an effort to stabilize the rupee against the greenback.
Indeed this currency smuggling has remained a serious issue in our country and the FIA must continue its operation against those involved in the illegal business, but time has come for the government to intervene to check the rupee devaluation.
Financial experts suggest that given the economic indicators, dollar is currently overvalued and it should be between Rs 160-165.
Adviser on Finance Shaukat Tarin himself is on record saying that dollar rate is nine to ten rupees higher than what it should be.
Though the State Bank of Pakistan (SBP) has taken some measures but their effectiveness has not reflected on the dollar rate.
Government must show the requisite seriousness. There is no country in the world which leaves the exchange rate at the mercy of market forces.
The government or the central bank intervenes to keep the exchange rate from running amok.
Needful should be done to stabilize the rupee and rather bring down the dollar to its original value as doing so will have salutary impact and help bring down the prices of essential commodities including that of oil.
