(June 03, 2020)
FPCCI’s Businessmen Panel SVP, President Pakistan Businessmen and Intellectuals Forum and All Karachi Industrial Alliance, and former provincial minister Mian Zahid Hussain on Wednesday expressed concern over exchange rate erosion and called for steps to arrest the decline.
The central bank should stem the decline in value of rupee so that masses and the business community can take a break, he said.
Mian Zahid Hussain said the falling rupee will support exports to some extent but it will increase the cost of imports which are double than the exports, it will jack up the cost of all developmental projects including Diamer-Bhasha Dam, increase the price of raw material for the export industry and boost inflation.
Talking to the business leader of Karachi Women Chamber Nazli Abid, Zehra Zahid, Urooj Fatima Jafri, and Rehan Mehtab Chawla of Jamshoro Chamber, the veteran business leader said that erosion in value of rupee is not good for the economy but it is still less than many emerging markets for which credit goes to the governor of the State Bank.
The former minister noted rupee was down by 3.3 percent from Jan 20 to May 04 while the South African currency lost 21.6 percent of value during the same period. Similarly, the Turkish currency lost 16.5 percent and India rupee was down by 6.2 percent.
Other economies also suffered as investors pulled back their money but that fall in the value of Bangladeshi and Egyptian currencies were insignificant.
Around 27 billion dollars were pulled out of the markets of developing countries in the months during the global financial crisis of 2008 but 59 billion dollars were pulled out from emerging markets in one month during the recent corona crisis.
He noted that local economic activities have taken a blow in Pakistan like many other countries and the situation may not improve in the short-term.
The auto sector activity fell by 69.6 percent during the months of March while the petroleum sector witnessed a fall of 31.4 percent, cement sales fell by 14.3 percent and exports also suffered, export of food items was declined by 25.7 percent, high value-added textile exports were down by 15.3 percent and low value-added textile exports suffered by 32.5 percent.
The prevailing conditions can be improved by a reduction in interest rates which should be considered seriously, he demanded.