THE recent depreciation of the Pakistani rupee against the US dollar has raised significant concerns about its impact on the country’s economy and the well-being of its citizens. The depreciation has far-reaching consequences that extend beyond currency markets. Immediate and strategic measures are required to stabilize the currency, alleviate inflationary pressures and ensure the well-being of the population.
The devaluation of the currency has a cascading effect on the economy, particularly in a country heavily reliant on imports. The increase in the cost of importing goods, including essentials and non-essentials, translates to higher prices for consumers. Electricity and petroleum products, being integral to daily life and industries, are particularly susceptible to the fluctuations in currency value. As the rupee weakens, the cost of generating electricity rises due to higher import costs of fuel, leading to potentially destabilizing impacts on industries and households alike. The fact is that the electricity bills have gone beyond the reach of common man and that is why one is witnessing protests on inflated bills across the country. High prices will also affect the competitiveness of our goods in the international market. Despite being in the IMF program, such a fall in rupee is surprising for many. The caretaker government, though has limited time in office, needs to come up with some concrete program to put things in the right order. This will help build confidence among investors and the public. It is imperative to address structural issues in the economy that contribute to the volatility of the rupee. This includes improving the balance of trade, reducing reliance on imports and fostering domestic production. Boosting exports is the only way through which a steady stream of foreign exchange can be ensured, thus alleviating pressure on the rupee. The government should incentivize industries to produce goods for export and streamline export processes. Then we need to take steps to attract more remittances from overseas Pakistanis. Diversifying income streams through investments, tourism and other avenues can make the economy more resilient.
