Exporters want rupee devalued

E-Paper | March 15, 2026

KARACHI: It is believed that the government has removed the cap on rupee-dollar exchange rate in the inter-bank market on exporters’ demand. They deemed it crucial to keep Pakistani products competitive in the global markets, banking sources told Dawn on Friday.

The local currency witnessed a sharp depreciation of 2.25 per cent against the US dollar in a single-day early this week. It attracted rush of investors and the market demand for the greenback rose sharply.

The sharp devaluation of Chinese yuan was the root cause of the wave of depreciation in the regional currencies including India and Bangladesh -- the three countries are main competitors of Pakistani exports particularly the textile products on the world markets.

While the number of letter of credits (LCs) opened by the importers witnessed a sharp increase during this week, the State Bank had to ask banks to stop forward booking. At the same time, the demand in dollar in open market rose to $8 to $10 million per day while it was about $4-$6m per day in June.

The dollar price seemed to settle at Rs104 in the inter-bank market, an increase of Rs2 within a week.

Bankers said that the dollar may not see any significant fall against the rupee since the countries in the region have adjusted values of their currencies after devaluation of the Chinese yuan.

The market experts believe the yuan would not see any appreciation due to a number of reasons including the slow economic growth of China.

They also said the steep of fall of equity markets across the globe and further cut in the oil prices made the US dollar best option for investment.

Moreover, gold is still not attractive for the investors while other international currencies like euro and British pound have been losing strength against the US dollar.

Banking sources said the State Bank has been trying to hold the dollar below Rs104 and it looks that dollar will not be allowed to gain more in the next couple of months.

They said China devalued its currency after a long time while it was due at least three years before. It is out of question that China will devalue its currency again in near future, they added.

Published in Dawn, August 29th, 2015

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Shahid Iqbal is a reporter for Dawn based in Karachi with 38 years of experience covering politics and economics. His career includes seven years with the Japanese newspaper Asahi Shimbun, as well as roles at United Press International (UPI) and AFP.

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idrees

Aug 29, 2015 11:58am

Pakistan import is more than export and in the situation of the devaluing the rupees will lead to improve the export but can we consider also the impact on the import which is more than the export.

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Cyrus

Aug 29, 2015 01:54pm

China devalued the yuan and their stock market crashed. Devaluing the rupee could hurt investor confidence. Devaluing the rupee would make goods cheaper to buy on the international market but if export volume remains low there is no value in weakening the rupee. There are other economic factors at work other than trying to make Pakistani goods more price attractive. You lose on the other end if export value does not rise but inflation does. If you lower prices and there is no rush to buy from abroad, then ordinary people will be hurt by more inflation and job growth will show no effect.

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Woz Ahmed

Aug 29, 2015 06:29pm

Devaluation is attractive, but as @Cyrus says if we can't boost exports its of no value. Think of it this way, GSP Plus is duty free imports into the EU , ready made garments were taxed at 12%, so for ready made garment manufacturers that's equivalent to 12% devaluation and a huge boost in competiveness against India and China, result ? Garment exports were diverted to Europe and overall garment sales by value fell. On the other hand we have huge international debts, import nearly double what we export, so all will require more foreign exchange. Much of our imports are not substituable . Under CPEC $35 billion is for power plants, bulk with imported fuel, the rate of return is opaque, but 30% looks the norm, a devalued currency will not help. What surprised me, was the A paper suggest the Renimbi is 30% overvalued, if true not sure how even efficient producers like Bangladesh or Vietnam, let alone us, will compete !

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bkt

Aug 30, 2015 12:38am

This is a fair demand given that the region's economies are also devaluing their currencies very rapidly, making their goods much cheaper than Pakistan's. It will also allow Pakistan to export more as there are surpluses to export from Pakistan at this time.

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nabeel hasan

Aug 30, 2015 01:09am

@Cyrus do u know how did they(China) improve their stock market recently.. exporters are the real profit-providers for a country. Iran's stock exchange is worth more than pakistan's but their currency is devalued.. Pakistan really needs to boost its exports

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Shazad

Aug 30, 2015 02:11am

Pakistan export increased from around 5 bn dollars in 1988 to around 7 bn dollars in 1999 and during that time rupee kept devaluing. Rupee in open market devalued from around Rs 15 a dollar in 1988 to Rs 60 a dollar in 1999. ... So, we can see that devaluation did not increased export. On the other hand, Pakistan export increased from around 7 bn dollars in 1999 to around 18 bn dollars in 2008 (in 9 years) even though rupee value kept constant at around Rs 60 throughout. Shows Pakistan export increased when rupee was stable. It means devaluation of rupee does not help export. Same happened after 2008 when rupee devalued substantially (from ~60 to ~104) but export did not increased (still ~20 bn dollars). Only crooks (in politics and bureaucracy) and corrupt exporters love devaluation, not because export would increase but because they make money from devaluation, as they have huge dollar holdings that they accumulated through corrupt means.

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Shazad

Aug 30, 2015 05:52pm

Other big problem of devaluation is that trust on rupee evaporates. I know many people who save in dollar instead of rupee (with good argument), as advantages are numerous. Many Pakistanis do not want to take interest, lose value on their savings in rupee because of inflation and devaluation. Inflation in USA (dollar inflation) is much lower than Pakistan and Pakistani rupee keep devalue against dollar, thus people keeping their savings in dollar (even in safe deposits) earn fair rate of return without hint of interest due to devaluation. Return on dollar savings due to devaluation does not attract tax of any type. One do not need a lot of notes for large savings ($100 = Rs 10,400) as one $100 note is worth more than 2 notes of Rs 5000. One 500 euro note ~ Rs 60,000. That means one can keep 160 (Euro 500) notes to save one crore. So, nice going. Devaluation cause mistrust on rupee as saving and when people start saving in dollars or euro than Pakistan loses, and corrupts gain.

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