According to newspaper reports, pressure is mounting on the government to slash the value of Pakistani rupee against dollar. Finance Minister Ishaq Dar and Prime Minister Shahid Khaqan Abbasi are braving all internal and external pressures to save the currency from depreciation. Rupee is already a weak denomination as compared to various other currencies of the world and has been on a downward trajectory since it broke its bonds with British pound in early 70s and shifted to dollar. Since then, its value has been fluctuating and is fully relying on the dollar rate determined by the market forces of demand and supply. A stable currency guarantees a stable economy. However, frailty of the economy of Pakistan is exposed on every ‘unusual occasion’ in the past whether it was political uncertainty or the change of the government. The grip of the central bank on currency is also subject to certain conditions as it happened last month when rupee began to shed its values in a free fall manner. However, the finance minister came to the rescue of rupee and saved it from the clutches of so-called money managers.
So far, Mr Dar has successfully maintained the rupee value at certain level and ward off pressure from all sides to depreciate its value. The fact remains the pressure has been mounting on the government as it goes in the benefits of the groups who want to multiply their deposits in one go and leave the economy in lurch. Devaluation of currency should be the last option in the game of business, trade and investment. If the country is able to produce export surplus and rationalize imports, it will definitely reduce the issue of trade deficit. For arguments sake, if rupee is depreciated, it will benefit only to certain exporters, but will adversely affects imports of consumer goods which will not only increase smuggling, but also spur inflation in the country.
The economy of Pakistan is passing through difficult times as political uncertainty is looming large in the country, the hostile neighbours are continuing to hatch conspiracies and terrorism still exists. The next general elections are only months away. In this situation, it is better not to make the mess of already fragile economy. Mr Dar has foiled every attempt to devalue rupee and it is hoped he will use his good offices to keep the national currency stable in any circumstances.
