ISLAMABAD: The government should announce its policy on rupee depreciation to settle the issue of artificial hike in the currency’s value against the dollar, a business leader has said.
“The government’s silence on the matter has provided an opportunity for profiteers to earn undue profit and harm the masses as well as the economy,” former Islamabad Chamber of Commerce and Industry (ICCI) president Atif Ikram Sheikh said in a statement.
“We are sure that the government will not let the currency depreciate, but a formal announcement should be made since people are already buying dollars in huge quantities in anticipation of rupee depreciation.”
Sheikh said political uncertainty, depleting foreign exchange reserves, poor financial health of the country and widening of current account and trade deficits were some of the reasons behind appreciation of the US dollar. Rumours of rupee’s depreciation were also pushing the dollar’s price upwards.
He said the rupee had remained stable over the past two years as authorities ignored requests of exporters and repeated advice of the International Monetary Fund for exchange rate adjustment.
“The government should do something about speculative attacks on the rupee which can result in a free fall as witnessed in July,” he added.
The business leader said experience showed that the exchange rate could not be left to be set by a market afflicted by excessive speculative trading activity while the recent fall would push people to buy dollars to protect their savings. Expatriates would also be encouraged to use illegal channels for money transfer.
“Currency depreciation will not only stoke inflation and make the masses poorer but it will also increase the cost of debt servicing and projects requiring imported capital goods,” he observed. Sheikh said continuous depreciation of the rupee since the 1970s had not helped the country in boosting its exports.