The Pakistan Economy Watch (PEW) on Sunday said initiatives taken by government and State Bank of Pakistan to check the slide of local currency and tame US dollar remains insufficient.
The emergency measures taken by authorities not helped a lot but encouraged those involved in hoarding and smuggling of currency, and spreading rumours for personal gains, it said. Government should give a second thought to the situation and take serious steps to contain exchange rate volatility otherwise its cost will become unbearable for the battered economy, said Dr Murtaza Mughal, President PEW. SBP interventions and meetings between economic managers and moneychangers in cordial atmosphere will never resolve the problem but supplement it, he said adding that market forces behind decline deserves no mercy.
Best way to stop rupee from shedding points is to attract foreign investment, ensure stability and sustainability to regain confidence of investors and improve law and order situation.
Moreover, a series of fundamental reforms including proper legislation to protect the investment of foreign investors can also help resolve crisis, he said. Dr Murtaza Mughal said that government can introduce profitable schemes for overseas Pakistanis which will boost the dwindling forex reserves which has become a major problem. He said that officials of the central bank have remained unsuccessful in stabilising rupee and now some of them are backing IMF demand to devalue currency to hide their inefficiency. SBP should consider issuing regulations requiring exchange companies to ask customers to reveal reason behind buying dollar, he opined.
The policy of IMF to force developing economies towards dollarization has very negative consequences for poor nations while it is highly beneficial for developed world, he noted. He said that people are investing in dollars due to lack of investment opportunities which is escalating demand for dollar which should act as a wakeup call for the managers of the country. The demand of dollar and gold is tied to the trust of masses and investors in the local currency which is shattered due to economic problems, political uncertainty, slowing growth, high inflation, poor policymaking, regressive taxation and humiliating balance of payments situation, said Dr Mughal.
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