ISLAMABAD: September 12,2022: Federation of Chambers of Commerce and Industry (FPCCI), Irfan Iqbal Sheikh, has emphasized that the government and the State Bank of Pakistan (SBP) should immediately take cognizance of the fact the Pak Rupee has entered into a yet another depreciation cycle; and, there is no end in the sight for the falling spree to end as it has fallen for the seventh consecutive session as of Monday.
Irfan Iqbal Sheikh explained that all contractual obligations of manufacturers and commercial importers enter into an uncertain zone when the currency starts to lose value. He apprised that the rupee has lost 4 percent value in just five sessions of the last week alone. He wondered that why the government is adamant on taking no action over this clearly anti-people, anti-business, anti-exports and anti-growth phenomenon.
FPCCI Chief apprised that the differential between inter-bank and open market has widened to PKR. 8 – 10 due to the speculative trading, rumors of further rupee depreciation and week implementation of policy tools by SBP. He has also questioned the government to explain how and why they will be able to manage the additional inflationary pressures – which seem inevitable now.
Irfan Iqbal Sheikh maintained that it is an open secret that the commercial banks are also involved in the speculative trading of dollar and making windfall profits. He has demanded stricter controls over the commercial banks by SBP and it should swing into action immediately.
FPCCI president highlighted that the business, industry and trade community of Pakistan was all hopeful that rupee value will be stabilized after the deal with the IMF on extended finance facility (EFF) is sealed and the combined tranche of 7th& 8th review, i.e. $1.17, billion is disbursed. However, despite the said disbursal, the rupee has not yet been stabilized.
Irfan Iqbal Sheikh added that economists have a consensus that real effective exchange rate (REER) of the dollar against the rupee is less than PKR. 200 for a dollar; and, for all practical reasons, the current depreciation cycle is the direct result of speculative trading, lack of regulatory oversight and mismanagement of the forex market.
Irfan Iqbal Sheikh has reiterated the earlier demand of FPCCI that if the government and the central bank of the country fail to reign in the ever-falling rupee yet again, the country needs to revert to a fixed exchange rate regime instead of the current free-floating exchange rate mechanism