Strategy evolved to level imports with exports and remittances; PM calls emergency meeting as country’s economy sinks
Ijaz Kakakhel Islamabad
Over the continuing Pak rupee devaluation against US dollar, Finance Minister Miftah Ismail on Wednesday held responsible the political uncertainty in the country, however, he claimed that the situation would improve in next few days.
Talking to journalists, the minister said that there were some factors that have contributed to the drop in Pakistani rupee against US dollar.
The Finance Minister said that the rise in the dollar rate is caused by political instability and the international rise in USD rates. Imports decreased by 5.3 in March and reserves were $10.3 billion, he added.
“Fundamentally the rupee is fine, there is not much pressure on rupee in the market and we should be okay, and I think that there may be some reversal,” he added. The finance minister said that the rupee downturn is not due to economic fundamentals. “The panic is primarily due to political turmoil, which will subside in a few days.”
Miftah reiterated that the local currency had depreciated against the dollar whereas it had strengthened against Pound, Euro and Japanese Yen.
He said the US dollar has witnessed a 22-year high appreciation against all currencies, however, admitted that the current political situation in the country was one of the reasons for rupee depreciation.
While quoting the State Bank of Pakistan (SBP), Miftah said that in terms of real effective exchange rate the rupee has depreciated by 3% since December keeping in view inflation.
The finance minister revealed that the government had taken result-oriented measures to level imports with exports and remittances. “We are trying to bring imports almost equal to exports and remittances.
Because we do not have space in foreign exchange reserves to reduce these and we also do not have other reserves. Therefore, we want to strike a balance between imports, exports and remittances.”
The minister said that soon after assuming power, the government-initiated measures to reduce imports and it achieved success in June when the non-energy import bill went down 15%.
However, he added, the energy imports increased due to price-hike in the international market and the import bills surged by 120% last month. He said, there were imports of $7.4 billion last month including $ 3.7 billion in energy and $3.7 billion in other imports.