Where’s Dar sb, though?
Not very surprisingly, the finance minister has not been as vocal about the rupee giving ground to the great dollar as he was about its stabilisation not many months ago. Perhaps this time he’s more aware of exogenous forces influencing international currency movements than when he got the Saudis to park a billion odd in our vaults to shore up the rupee. But if he is, he’s not being his usual enlightening self about it. For example, he’s not telling people how financial currents far beyond Islamabad’s reach are strengthening the dollar, and how economies like Pakistan can benefit from the exchange rate trend.
US stability, China’s slowdown, euro under pressure, and falling commodity, especially crude, prices have combined to encourage a safe haven inflow into the dollar. This has triggered exchange rate toggling even in traditionally pegged currencies, like the Chinese yuan. For Pakistan the weak rupee environment opens a window to stimulate export earnings, especially when low oil will cut down the input bill. But, unfortunately, exports – like so many things associated with the economy – have never been the N-league’s strong point, despite the business lobby being its core voting constituency.
Dar sb has already overseen the export-to-GDP ratio drop from 10.7 per cent when he took over this time to 8.9 per cent in 2014-15, the lowest in three decades. Falling exports from the last fiscal carried over into the new year, with the first month registering a 17 per cent fall. Even the Saudi gig, which held the rupee where Dar wanted it, cut into the GSP plus program, which is a story in itself. Then there are other problems. Our chief export is still cotton and associated products. There has been no effort at value addition. And since cotton is weak this year, and India and Bangladesh have overtaken us in its trade, there’s little to expect the weak rupee to do, other than make imports more expensive. Hopefully how that affects the upper class addicted to luxury import will not be allowed to affect policy.
