Rupee Bleeds

State Bank of Pakistan (SBP) Governor Dr Reza Baqir will always be held responsible in history for a massive depreciation of the rupee against the dollar, experts and economists said.

Since his appointment as the central bank governor on May 4, 2019, the rupee has lost around 29 per cent against the greenback.

Soon after joining the office, Dr Baqir declared that the central bank would not intervene in the market and would let the market forces determine the rupee value.

The rupee is at the historic low of Rs181.73 in the interbank market on March 22, 2022. Its free fall may be attributed to widening current account balance, high prices of commodities in the international market and volatile oil prices in the wake of the Russia-Ukraine war.

However, the pace of the rupee decline got faster after the opposition parties moved a no-motion confidence against the government on March 8, 2022.

Senior economist Dr Ashfaque Hasan Khan said that the persistent political uncertainty is favouring the SBP governor.

“The SBP governor is responsible for the failure to control the exchange rate and high interest rate in the country,” he said.

Rejecting the notion that the ongoing rupee depreciation is market-driven, he said, this was part of the International Monetary Fund (IMF) action plan. The unabated decline in the rupee value resulted in high prices of essential items, weakening of the economy and the rising cost of raw materials for industries.