(March 16, 2020)
President Pakistan Businessmen and Intellectuals Forum (PBIF), President All Karachi Industrial Alliance (AKIA), Senior Vice Chairman of the Businessmen Panel of FPCCI and former provincial minister, Mian Zahid Hussain on Monday said upcoming monetary policy amid difficult global and local circumstances to test the skills of central bank officials.
The coronavirus is shaking the foundations of the global economy, the economy is facing new challenges in Pakistan and the business community has been advocating to reduce the interest rates.
Mian Zahid Hussain said that the insistence of the business community has led Prime Minister Imran Khan and other top officials to promise a reduction in the interest rates.
Talking to the business community, the veteran business leader said that the business community has run out of patience to withstand strict monetary policy while on the other hand, SBP is facing new challenges.
The former minister noted that threats to the global financial system has prompted foreign investors to pull out their investment from developing countries in favor of low risk investments.
Pakistan has attracted a lot of hot money due to high interest rates but now 600 million dollars have been taking out by foreign investors during the first twelve days of the current month and it seems that the trend will continues. The decision of foreign investors has resulted in instability, exchange rate volatility and reduction in foreign exchange reserves which has emerged as a challenge for the central bank.
He said that the dollar jumped from Rs155 to 160 in a few days and then retreated which has scared foreign and local investors.
Many countries have reduced interest rates to boost economy hurt by coronavirus but we don’t have this luxury, he said, exchange rate stability and reduced interest rates cannot co-exist while business community is also pinning high hopes in the next policy statement which is a test for the central bank.
