Formula not applicable in Pakistan, many countries faced huge losses: Mian Zahid Hussain

Business News English

Karachi, October 22, 2021 (PPI-OT):Chairman of National Business Group Pakistan, President Pakistan Businessmen and Intellectuals Forum, and All Karachi Industrial Alliance, and former provincial minister Mian Zahid Hussain on Friday said the disadvantages of devaluing the rupee are more than advantages as it is hitting the entire population and stoking poverty.

The policy of devaluing local currency can start a currency war with rival countries that can result in a loss rather than a gain, he said. Mian Zahid Hussain said that the formula of devaluing currency is not applicable in Pakistan as many countries have suffered huge losses by devaluing their currency against USD and other currencies.

Reacting to a statement issued by Governor State Bank Dr. Reza Baqir, he said that devaluation of local currency can increase exports to some extent and reduce the trade deficit but at the same time it makes imports more expensive and increases the pace of inflation. He noted that in a country like Pakistan where imports are almost three times higher than exports and huge quantities of imported raw materials are being used in exports, this formula is not applicable.

The devaluation of the currency has increased the country’s debt by about Rs 2400 billion, while local and foreign investors are worried over uncertainty, he said. The business leader noted that many countries have suffered huge losses by devaluing their currency while some have faced currency wars with nations that rival them in the international market.

Governor State Bank has said that cheap rupee benefits overseas Pakistanis and remittances are increasing due to depreciation of rupee while the families of Pakistanis living abroad are already getting Rs. 500 billion more. But, he said, in reality the government has failed to properly invest thirty billion dollars received as remittances which is also contributing to the huge increase in inflation.

It is also a fact that the number of exporters is a few thousand and the number of overseas Pakistanis is about nine million for whose benefit it is unwise to push 21 crore people into the hell of inflation, he observed. Mian Zahid Hussain further said that increase in the value of currency reduces imports and reduces inflation. Due to cheaper imports, local industries have to strive to increase the quality and quantity of their products due to competition, which benefits the masses. Even if the rupee was devalued to Rs 400 against the dollar, the country’s exports would not reach the level of imports, he warned.

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