A stable currency is very important to achieve real economic growth for any country in the world. It appears that our honourable Prime Minister, Mr Imran Khan does not understand this economic matter in the real sense because he is a cricketer turned politician.
Pakistan Rupee has depreciated about 45% during the last three and a half years since Imran Khan came into power in the August of the year 2018. The exchange rate of Pak Rupee was Rs 120 = 1 US$ in August 2018 which is now Rs. 175= 1 US$. Forty-five percent of the depreciation of its currency is an economic disaster for any country. When a currency is depreciating and has a weaker outlook, the investment stops coming from abroad. A country like ours can’t achieve real economic growth without foreign investment. Secondly, a devaluation tends to cause inflation especially in our country which has huge imports of goods.
Since we have very sizeable imported contents in our consumption, the prices of goods and services increase immediately after devaluation making the life of a common man very difficult. Theoretically, devaluation should result in an increased demand for exports because our exports become cheaper abroad for the foreign buyers but we don’t get any noticeable increase in our exports after devaluation because we don’t have any significant exportable surplus.
On the contrary, we make a loss in a real sense as our exporters are asked by the foreign buyers to reduce the prices of goods in US $ because our exporters get more Rupees of their export proceeds of US Dollars after devaluation. In view of the above, I suggest to the honourable Prime Minister, Finance Minister and Governor of State Bank of Pakistan to take necessary steps stabilise Pak Rupee and stop it from further devaluation.
EJAZ AHMAD MAGOON
LAHORE
