The Reasons for the Worst Depreciation of the Pakistani Rupee Against the Dollar

At present, the value of the Pakistani rupee against the US dollar is at an all-time low and some experts believe that it will depreciate further and the Pakistani economy, which is already struggling. This situation is adding to its difficulties.

What are the reasons for this decline in the value of Pakistani rupee? Economists have differing views. Some believe that the main reason is the situation in Afghanistan. Which is currently suffering from the worst economic crisis. And this is the price that Pakistan has to pay because of the situation in Afghanistan.

Dr. Abid Qayyum Salihar is the Executive Director of the Sustainable Development Policy Institute or DPI. Talking to VOA about this, he referred to the situation in Afghanistan and said that he believes that the situation will continue until a stable government is established in Afghanistan that is internationally recognized. Can live If this is included, then the population of Pakistan has increased from 220 million to 260 million.

“The devaluation of the rupee is largely due to our balance of payments and rising imports,” he said. But we cannot ignore the situation in Afghanistan, where there is a severe foreign exchange crisis. Their foreign exchange accounts are frozen. If they don’t have dollars, they will have to get dollars from somewhere and obviously these dollars will be bought mostly from Pakistan and going there legally or illegally.

He said that earlier only wheat was smuggled there, but now much more is going on. An example is that urea fertilizer is currently پانچ 500 per ton in Tajikistan, while in Pakistan it is دو 250 to سو 250 per ton. Because it is produced at discounted rates. So urea is also being smuggled.

He said that it was as if everything from food items to foreign currency and fertilizers were being smuggled, the burden of which was obviously being borne by Pakistan.

He said that the volatile situation in Afghanistan has affected foreign investment in Pakistan. Because unless Afghanistan is stable, the chances of foreign investment coming to Pakistan are very low.

Dr. Salihri said that above all, Pakistan has to pay the price of political economy. In this regard, he cited a September 16 editorial in Bloomberg magazine and said that it had thrown all the rubble of the situation in Afghanistan on Pakistan, saying that Pakistan had been removed from the FATF’s gray list so far. He should not be allowed to leave unless he proves by his actions that he has completely stopped financing terrorists or jihadists are not leaving. He said the reality is the opposite. Tehreek-e-Taliban Pakistan is attacking Pakistan from there. He added that this is the newspaper’s own opinion but the fact is that Pakistan is having to bear the brunt of its economic and geopolitical effects after the Afghan people.

Asked what alternative options Pakistan has, he said there are not many. Because an impression has been formed about Pakistan. And because of this impression, the tours of cricket teams are being canceled. Then who will come to invest. However, if a stable government is formed in Afghanistan and China recognizes it and includes it in the Belt and Road project, then Hakistan can benefit from its C-Pack project, especially the Gwadar port.

Dr. Ashfaq Hassan is a prominent economist and former finance adviser to Pakistan. Speaking to VOA, he said he did not think the rupee’s depreciation had anything to do with the situation in Afghanistan. Because the fall of Kabul happened on August 15. And by that time the rupee had already depreciated sharply. Which continued from the month of May

Dr. Ashfaq said that it was the responsibility of the SBP to keep the exchange rate stable which was not fulfilled. “Everything was going in the right direction after the budget,” he said. And the private sector was very satisfied. And there was no justification for putting pressure on Pakistan’s exchange rate.

“On May 7, our exchange rate was Rs 152.28 and on that day the country’s reserves were more than 15 15 billion,” he said. And our reserve was growing. But the exchange rate was going down. Which is against all the principles of the economy, because the increase in reserves is a sign that incoming dollars are more than outgoing dollars. Dr Ashfaq Hassan said there was a need to investigate why this happened.

Shahid Javed Burki is a former World Bank official. He also believes that such a sharp fall in the value of the rupee against the dollar has little to do with the situation in Afghanistan.

Talking to VOA, he said that many new projects have been launched in the country for which there is no choice but to import goods. In addition, there has been no significant reduction in the import of luxury items, although the government has now banned the import of more items. So the dollar is going out more and coming in less.

“Of course, the people of Afghanistan are buying dollars from Pakistan because they do not have a foreign exchange,” he said. Their assets have been frozen in Western countries.

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The Reasons for the Worst Depreciation of the Pakistani Rupee Against the Dollar - /10

Summary

At present, the value of the Pakistani rupee against the US dollar is at an all-time low and some experts believe that it will depreciate further and the Pakistani economy, which is already struggling. This situation is adding to its difficulties.

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