LAHORE:The Lahore Chamber of Commerce and Industry (LCCI) demanded the government to
control rate of dollar by putting in order more effective measures.
LCCI President Mian Nauman Kabir told the media here Thursday that the dollarization
occured when the local currency became unstable and started to lose its profitability
as a medium of exchange due to hyperinflation or instability.
Mian Nauman Kabir said that the economy was already paying a huge cost to the rupee
devaluation as all the imported inputs and petroleum products had become costly.
He said that devaluation was taking place as the inter-bank dollar rate had plunged to Rs 206.
This essentially means that a devaluation of around 6.5 per cent had taken place in the last
one month only. The main cause of the devaluation in recent times has been political
uncertainty, rise in global crude oil prices and a burgeoning trade deficit which has
surpassed US $ 43 billion in the first 11 months of the current financial year.
“Since our industry heavily relies on imports of raw materials, components and machinery, this
devaluation has resulted in an increase in the cost of production. The new government should
take all possible measures to strengthen the local currency. There needs to be a renewed focus
on import substitution and enhancing exports besides creating an environment of political stability.
The imports of non-essential and luxury items should be curtailed. In the regional economies like
India, the currency has remained stable as the devaluation has been merely 0.3 per cent in the last
one month. In China, the currency has in fact strengthened against the US Dollar in the last
one month,” the LCCI president added.
He said that sharp surge in the prices of the Greenback will jack-up the input cost that would hit the export-oriented industries hard.
The LCCI president said the State Bank of Pakistan needed to ascertain the factors weakening the value of rupee and check the possibilities of undue speculations and malpractices in the operation of foreign exchange markets in Pakistan. This will help stabilize rupee and restore the confidence of the business community.
He said an unchecked increase in the dollar rates was multiplying the cost of doing business and badly affecting the industrial, manufacturing and agriculture sectors as Pakistan has to import fertilizers, food items, oil, machinery and industrial raw material.
Mian Nauman Kabir said the government should take immediate measures to arrest further devaluation of rupee to avoid more damaging consequences for the economy.