KARACHI: The State Bank of Pakistan (SBP) should play its role and devise effective strategy to stop further devaluation of rupee which is having a lethal impact on the economy and the inflation reading, said Karachi Chamber of Commerce and Industry (KCCI) President Muhammad Idrees.
In a statement on Tuesday , he expressing deep concerns over persistent devaluation of rupee against the US dollar which hit a new all-time high by dropping below Rs186 against the dollar.
“While the experts are attributing the rupee devaluation to political uncertainty, the SBP, being the regulator, should play its due role,” he said. “Failure to do so will multiply the problems facing the economy which is sinking.” He pointed out that widening current and fiscal deficits were the two most daunting problems for the country.
Idrees said that strengthening of dollar against the rupee was raising the cost of doing business, making local goods uncompetitive in the export markets and unaffordable for the common man at the local markets. He lamented that businesses resorted to pass on the impact of rising dollar on to the end-users.
“It has to be understood that the share of exports in GDP stands at around 10% while the rest 90% is local trade and imports,” he said. “Therefore, the devaluation is hurting and it has reached an unbearable level now.”
Due to lack of effective price control mechanism, an abnormal upsurge has been witnessed in the prices of almost all the household commodities which have to be controlled to ease the already overburdened and miserable life of the inflation stricken common man, he stressed.
Severe devaluation of rupee has raised the cost of doing business and fostered inflation therefore, it is crucial to review the current strategies being pursued by the regulator, he reiterated.
The KCCI president feared that the economic crises including energy problem, devaluation of rupee against dollar and rising trade deficit would push the economy to a point of no return and place Pakistan’s survival at stake. “All the efforts made to record over 5% GDP growth will prove futile if the ongoing political uncertainty continues for prolonged period,” he said.