KCCI expresses concern over falling rupee value

KARACHI: Karachi Chamber of Commerce and Industry (KCCI) President Muhammad Idrees has warned that the rupee devaluation is going to have a deep impact on the inflation as it will raise the cost of doing business, a statement said.

He said that the rupee depreciation will not only make Pakistani goods uncompetitive in the export markets but also make them unaffordable in the local markets as the impact of rising dollar value will be passed on to end-users.

He noted that the local currency has lost around 2 per cent since the beginning of 2022 while in the previous year, the local currency had lost around 11 per cent in the interbank market from Rs159.2 as it hit Rs176.51 by the close of the year.

“On March 11, 2022, the foreign currency reserves held by the State Bank of Pakistan (SBP) were recorded at $15.83 billion while the overall liquid foreign currency reserves held by the country stood at $22.28 billion,” he said.

“The country’s current account deficit of $11.6 billion in the seven months of the current fiscal year was too high, compared with $1.028 billion a year earlier which was really worrisome,” he added.

Idrees said that the rupee depreciation has raised the cost of doing business and fostered inflation, therefore, it is really crucial to review the current strategies being pursued by the economic managers.

The KCCI president stated that the rupee devaluation against dollar is attributed to the mounting pressure by the opposition parties to oust Prime Minister Imran Khan through a vote of no-confidence and the tumultuous geopolitical situation in Ukraine.

“Although Ukraine situation is beyond our control, the political uncertainty in Pakistan needs to be handled prudently and it has to be ensured by the policymakers that the ongoing political situation should have a minimal impact on the economy,” he said.

Unfortunately, the most pressing economic issues are being ignored by the federal ministers who are paying no attention to serious economic crises and remain completely engaged in politics to stay in power, he lamented.

Idrees feared that energy crises, rupee depreciation and rising trade deficit would push the economy to a point of ‘no return’ and may even put Pakistan’s survival at stake.

“All the efforts made during the past couple of years to maintain GDP growth of more than 5 per cent will go wasted if the political uncertainty is not promptly handled,” he added.

He stressed that the emerging situation has to be efficiently addressed and handled otherwise, the excessive devaluation will continue to increase the cost of doing business, which would terribly affect the industrial performance, raise unemployment and increase inflation, particularly for the middle and lower segments of the society.

Idrees said that the Karachi Chamber has been constantly approaching federal ministers from time to time so that these issues could be extensively discussed, changes in policies could be suggested and a practical plan of action could be mutually agreed upon in the larger interest of the country.

However, none of these ministers have bothered to respond to KCCI’s requests while some of them postponed several meetings even after confirming which clearly indicates that economy was no more in their priority list and they all remain confined to politics only.

He expressed hope that the federal government realises the gravity of the situation at the earliest and accordingly takes steps to stop further rupee depreciation against the dollar otherwise some of the key economic indicators which have shown growing trend, will soon start descending.