KARACHI, March 20: The State Bank of Pakistan has hinted at the possibility of slowly adjusting rupee-dollar exchange rate adjustments “to benefit the economy through cheaper imports and saving in external debt servicing.”

“However, this may not be immediately possible,” the State Bank of Pakistan’s second quarterly report points out. Released on Thursday, the report takes a positive note of export performance. It says that as exporters gradually adjust to the structural shifts in Pakistan’s external account, it is probable that SBP may slowly accelerate the exchange rate adjustments.

The State Bank perceives a threat to Pakistan’s export trade in the coming days after having shown an encouraging 16.6 per cent growth in first half of the current fiscal year. The report speaks of the potential loss of exports orders due to regional geo-political developments.

Incidentally, the report has been released on Thursday when US launched offensive against Iraq — a major geo-political development fraught with frightening consequences.

The State Bank perceives two dimensions for Pakistan in this geo-political development. In the short-term the greater risk emanates from the threat of a US-led campaign against Iraq. The perceived risk to the fulfilment of export orders due to resulting regional disorders could potentially led to substantial diversion of business away from Pakistan.

“Pakistan will need a very aggressive campaign by the private sector to counter the risk perceptions,” the report suggests and also advises the government to play a part by supporting such initiatives. “The exports could be hit by the impact of high oil prices and higher transportation cost due to war risk premium,” the report says.