The rupee parity against the dollar and its subsequent fall against all major currencies continue to increase unchecked.
This Monday, at the onset of the new week, the US dollar traded at Rs. 157.00 against the Pakistani rupee, up Rs1.12 from Friday’s closing rate of Rs155.84.
This free-fall of rupee against the dollar has been going on for the past several months, especially since Pakistan entered into negotiations with the International Monetary Fund (IMF) for a loan package to bail out its flagging economy from ever increasing balance of payment crisis.
To secure US $ 6 billion package to be approved by the IMF board yet, one of the conditions the international body had set for Pakistan, was to let the market forces determine the value of county’s currency. No official word on this yet, media reports claimed, the role of State Bank of Pakistan regulating the value of the currency has been diminished.
The market forces directing the economy can be a good option. It shows the health of an economy. For such economies, business forces are not only strong but also work under stringent regulations. In our case, it is always a few individuals or a limited number of companies that have their monopoly in every sector.
They run that particular sector as they want. Pakistani stock market is one such case. There have been many scams where a group few individuals made billions through inside trading or using other illicit techniques. This left ordinary shareholder losses which they could not recover for decades.
The same has happened in many other sectors where mafias like sugar mafia, cement mafia, and real estate mafias made their fortunes at the cost of hundreds of thousands of ordinary people many of them have been left indigent after losing all their savings.
There have been reports that during the past few months, amidst fluctuation in the rupee value, some ‘smart’ people have made big fortunes. They have made billions. This gain on their part is not at the cost of a few individuals; the entire country is paying the price.
In the ever-increasing inflation, prices of commodities of daily use have witnessed a disproportionate increase. The business community across the board complains of a slump. Salaried class people are struggling to make both ends meet.
The incumbent Pakistan Tehreek e Insaaf government has incessantly been blaming the PPP and PML-N regimes for the egregious situation of the economy. The government claims it is forced to take more loans to pay off the loans accumulated by its two successors.
Prime Minister Imran Khan in his recent address to the nation announced a commission of inquiry headed by him to pinpoint those responsible for this debt trap.
He claimed the previous two governments added Rs. 24 trillion in the country’s debt during their five-year term each. As per his claim, the country’s debt increased from Rs. 6 trillion to Rs. 30 trillion from 2008-18. However, he was elliptical in telling the nation that another Rs. 6 trillion have been added to the national debt during the last 10 months since his government has taken over.
The depreciation of the rupee has added to the overall external debt of the country. This is despite taking all the steps present regime considered frugal.
When the role of regulators like SBP is forsaken, sentiments play an important role in the determining market. If cabinet members give gratuitous remarks like the nation would bear depreciation to the tone of Rs, 200 a dollar, it engenders negative connotations in the market.
There have been speculations in the market for past many months that rupee will depreciate to Rs. 165, a dollar and could fall further. No one from the government has taken it seriously or came up with any tangible plan to improve the foundering situation.
Has anyone at the helm of affairs ever thought what would be actual implications of this depreciation, even if we accept that this is being done to appease the international money lender to secure US 6 billion loans. It is yet to be determined the overall cost Pakistani nation would be born as a result devaluing of our currency.
Economists can easily calculate the cost. The government can easily gauge the agony a common people are going through by sending their ministers in any market, public place or dwelling without protocol through random surveys.
