The panic buying of dollars in open market not only shows frailty of the Pakistani rupee, but also incapacity of the government to implement its writ to keep the financial order intact. The recent indictment of Finance Minister Ishaq Dar by the National Accountability Bureau has increased uncertainty in the financial sector and the government’s assurances that the rupee will not be devaluated, have little effect on the currency dealers and general public. During his tenure as the finance minister, Mr Dar tried his best to maintain rupee value at certain level and once he is removed from the post, it will be difficult for the government to avoid a melt down. It is the strong position of Mr Dar as the finance minister which has kept the currency value intact and staved off all the pressures from the international donor agencies as well as the local exporters to depreciate the rupee value.Unfortunately, the devaluation remained an easy solution to enhance exports in the past. The rupee, which was three against a dollar in 1947, has been drastically devalued over the years. The workable solution to revive exports is to stimulate the industrial sector and produce value added goods.
Now it is a test case for Mr Dar who is facing corruption cases against him and the sitting prime minister not to let the economy down. A strong currency is the guarantee of strong economy and instead of scraping the value of rupee, the government policymakers should find other options to maintain the financial order in the country. Some economists give instances of currency devaluation by some leading economies of the world but the situation in Pakistan is different. Every economy has its own reasons to increase or decrease its currency value and strategy suitable in one country cannot be blindly apply on another. Alongside financial instability, the country is also facing political uncertainty and status quo is the best option at the moment. The general elections are less than a year away and economy needs not to be disturbed in the current situation. Prime Minister Shahid Khaqan Abbasi has already dispelled the impression that the government is considering any possible devaluation of rupee. According to the State Bank of Pakistan, rupee lost almost a half percentage point to Rs105.42 per dollar from Rs104.9 per dollar three months ago. The finance ministry should check the slow process of devaluation as it will bring nothing but inflation in the country. Instead of playing with the national currency, the policymakers should devise some concrete methods to boost exports. Devaluation of the currency should be the last option in any case.
