Pakistan’s Prime Minister Shehbaz Sharif chaired a meeting with the Exchange Companies Association of Pakistan on Monday to prevent the rupee’s uncontrolled fall in the aftermath of diminishing foreign reserves and inflows taking longer than planned to sustain the exchange rate.

According to a report published by Dawn on Monday, the dollar was valued at Rs 182.3 when the Pakistan Muslim League (Nawaz), aka PML-N-led, coalition government assumed power on April 11, and the currency has lost Rs 11.4 or 6.2 per cent of its value since then.

Malik Bostan, the chairman of Environment Consultants Association of Pakistan (ECAP), told the prime minister, “It is the open market or exchange companies that increase the dollar rates. In fact, the commercial banks have been increasing the rate,” at the meeting.

Due to the unstable exchange rate, importers are opening more Letter of Credits, while exporters are submitting fewer export revenues, resulting in a dollar shortfall, he added.

Representatives of exchange companies advocated banning all imports save essential items in a previous meeting with the financial adviser last Saturday. Experts and researchers have stated in their studies that attempting to repeat the past mechanism to lower dollar prices would be harmful to the economy.

According to the head of research, the currency rate should be determined by market forces, and the government should avoid using any artificial mechanisms to boost the rupee’s value.

During the conference, it was also suggested that all markets around the country be shut down before sundown, saving a significant amount of energy, lowering the import oil bill, and restoring supply to the public, according to Dawn.

Pakistan is expecting a loan from the International Monetary Fund, a $2.3 billion rollover from China, and assistance from Saudi Arabia. However, due to the Pakistan’s weak external accounts, the prospect of raising dollars from the foreign market through the issuance of Sukuk bonds is failing.

Oil import bills have already risen as a result of higher oil prices, while overall imports have also reached new highs. In July, Pakistani inflation surpassed the single-digit for the first time in over six years.

Author

  • Saqalain Eqbal is an Online Editor for Khaama Press. He is a Law graduate from The American University of Afghanistan (AUAF).