The Pakistan Industrial & Traders Associations Front (PIAF) has appealed to the government to take immediate action as the sharp fall of rupee continues against the US dollar due to pressure of import payments and the government inability to intervene, with the local currency hitting the 240.5 level in the inter-bank market.
The PIAF leadership criticized Finance Ministry and the central bank for not intervening in foreign exchange market to control dollar flight in light of the commitment with the International Monetary Fund (IMF).
PIAF Chairman Faheem Ur Rehman Saigol, in a joint statement along with senior vice chairman Haroon Shafique Chaudhary and vice chairman Raja Adeel Ashfaq, pointed out that the rupee was being quoted at 240.5, a depreciation of Rs4.48 or 1.9%, against the greenback during intra-day trading while it had closed at 236.02 the previous day. He said that the persistent political and economic uncertainty continued to add the pressure on rupee.
He maintained that pressure on forex is due to demand for payments against the import bill from last month, worth $7.5 billion. According to reports, Pakistan has posted a current account deficit of $2,275 million for the month of June 2022, compared to a deficit of $1,637 million recorded during June 2021. A widening current account deficit adds strain on the currency. Overall, the CAD was $17.4 billion in FY22 compared to $2.8 billion in FY21, depicting an increase of $14.6 billion in a year. Meanwhile, the US Federal Reserve raised the policy rate by 75 bps in an effort to cool the most intense breakout of inflation since the 1980s. Coming on top of a 75-basis-point hike last month and smaller moves in May and March, the Fed has raised its policy rate by a total of 225 basis points this year as it battles a 1980s-level breakout of inflation with 1980s-style monetary policy. This has added to the US dollar's strength against major currencies.
He appealed to the government to immediately give directions to the finance ministry as well as the central bank to play its due role of keeping the check on banking sector and stop exploitation of the trade and industry by charging exchange rate unfairly.
He also lashed out at the government over the sharp rupee depreciation against the US dollar, fearing it will stoke up inflation and halt economic growth by hurting all important sectors.
He said that the finance ministry should ascertain factors weakening value of rupee and check possibilities of undue speculations and malpractices in operation of foreign exchange markets with a view to help stabilize rupee and restore confidence of business community, he said.
He asked the government to begin consultation with the stakeholders as the rise in dollar’s value would spoil trade and economic activities besides hitting the common man.
He said that government should take immediate measures to arrest further devaluation of rupee to avoid more damaging consequences for economy.