The rise of the US dollar this week has resulted in the Pakistani currency reaching a 32-month low. Crossing the psychologically important barrier of Rs60 to the dollar shows that the rupee has weakened beyond the expectations of the country's economic managers. The rise in dollar buying can be ascribed to a number of reasons. The slide of the rupee against the dollar means that dollar inflows have not kept pace with outflows.
Foreign exchange reserves have dropped $59 million to $12.3 billion since the start of October. Between July and September 2004, the State Bank of Pakistan sold over $400 million to support the rupee but it is clear that this strategy has not been able to stem the rupee's slide. What we have seen instead is a slow depreciation against major foreign currencies.
This may be good news for exporters as it makes their products more competitive in the international markets but is bad news for other sectors as imports become dearer, which in turn puts pressure on prices.
The trend cannot be ignored for long. A widening trade deficit is due to expensive oil imports, rising inflation as well as a rise in other imports. These are the main factors behind the higher than anticipated dollar outflows in the month. It is estimated that the trade deficit in the current fiscal year will rise to five billion dollars as compared to $3.2 billion in the previous year and this year's target of three billion dollars. Non-food and non-oil imports have risen by 38 per cent in the first quarter (July-September) of the current fiscal year.
Despite the rise in the inflow of remittances by 8.4 per cent in the first quarter, overall foreign exchange inflows remain largely stagnant. The government cannot continue to rely on its foreign exchange reserves to keep the rupee at certain levels. More needs to be done to reduce outflows and, at the same time, boost inflows so that the trade deficit can be reduced in the long run.
Conduct inhuman
A photograph carried in this newspaper the other day showed the Karachi police taking several men accused of violating the Ehtehramul Ramazan ordinance to court. The law is promulgated every year with the advent of the holy month and prescribes punishments for anyone found eating in public. It also prohibits eating establishments from serving food during the fasting hours to any customer.
The intention is to preserve the sanctity of Ramazan and also not to offend the sensitivities of those fasting. However, as the photograph showed, the police seem to think that violation of this law amounts to a grave criminal offence, for why else would they have the offenders bound hand and foot by ropes while taking them to court? If the reason is a shortage of handcuffs then the police should obtain enough of these so that violators of laws do not have to suffer the ignominy of being taken to court like animals on the leash.
In a wider sense, the photograph reflects an increasing tendency towards sanctimonious behaviour among some in our society. For a start, one would like to see the police acting with equal zeal to arrest those who violate other laws of the land - for instance, those who kill in the name of honour, those who rape women, those who embezzle taxpayers' money or play with people's lives by selling spurious medicines or adulterated food.
There are many Muslim countries, particularly in the Middle East and North Africa, where the force of law is not used to coerce people into a display of piety. In fact, until the mid-'70s, in this very country too, serving food during fasting hours, discreetly and with shades down, was the norm for eating establishments. All that changed with Ziaul Haq and now we have to bear with scenes of men being humiliatingly roped and taken to court like animals, because they ate or drank in public.