SBP urged to intervene in market to curb dollar flight

LAHORE: The Lahore Chamber of Commerce and Industry has urged the State Bank of Pakistan (SBP) to make appropriate market interventions to curb the dollar flight, a statement said.

LCCI president Mian Nauman Kabir, senior vice president Mian Rehman Aziz Chan and vice president Haris Ateeq said that the rupee fall has far-reaching implications, including increasing the cost of production and inflation.

They said the local industry is dependent on imported raw materials, components and machinery and the devaluation of the local currency against the US dollar will definitely increase the cost of doing business.

Due to the high cost, they said, it would be difficult for the Pakistani merchandise to compete with the competitors in the international market.

They expressed concerns over widening trade deficit, which is the root cause of devaluation. They stressed the need to import substitution and expansion of manufacturing base to enhance the competitiveness of industry and curtail the trade deficit.

The LCCI office-bearers said the rupee devaluation will lead to lower industrial productivity, surge in debts, and further hike in inflation and will reduce the purchasing power of the masses.

The recent surge in the prices of the greenback will not only jack up the cost of doing business but would also squeeze the profit margins of the private sector, they said, adding that the government should take immediate measures to stop further devaluation of the rupee and to avoid more damaging consequences for the economy.

They suggested the government to immediately introduce institutional reforms and curtail non-development expenditures for the sake of the country’s economy and its people.