Makhdoom Ellahi runs a jewellery shop in Dupatta Gali near Tariq Road. The Ellahis have been artisans in gold jewellery for generations, migrating to Karachi from Delhi and trace their craft back to the time of the Mughals. What was once their primary source of income today fails to sustain their family due to the rising price of gold and the recent dollar instability.
“With the dollar rising quickly, the effect on our business is great,” says Makhdoom Ellahi, who has been involved in their family business for the past 40 years. “We are working two or four other jobs now because we don’t get that much work anymore. A lot of jewellery shops are winding up and business has become slow.”
The rate of the dollar hit an all-time high at 144 rupees in November last year after having increased by 11 rupees the previous month. Local businesses, travellers and students in foreign countries face challenges in their everyday lives due to the dollar increasing.
Pakistanis from different walks of life struggle to cope with rupee depreciation
Mohammad Salman, 34, is a businessman based in Karachi who specialises in importing home care, rehabilitation and medical equipment, which he then sells to wholesale distributors and hospitals. He claims a 33 percent loss in his business in the past year since the rupee first took a plunge.
“As importers, we aim for a yearly profit. With the rupee dropping, the cost of products increases without any notice,” he says. “We can’t implement our orders, and it results in a loss.”
The Ellahis shifted their Tariq Road shop on the main road to a more affordable location three months ago because they could no longer afford the high rent. With time, costs have started to exceed returns on the jewellery business, which are mostly utilised in the maintenance of the shop and paying employees. Ellahi says, “In the past couple of months, that rate has become higher. We’ve experienced a difference of 10,000 to 12,000 rupees only in rent.”
“We are trying to take our business in a direction where our expenses are reduced. Right now there isn’t that much profit in this work,” says Masroor Ellahi, Makhdoom Ellahi’s son who works full-time in the shop. “In the future, we anticipate looking for other work because a person can’t run his home with just this.”
But this is easier said than done. As Makhdoom Ellahi says, “It’s something we’ve been doing since my grandfather’s time. I can’t do anything else.”
While analysts have speculated that the drop in the rupee may allow exports to flourish — an initiative vocally supported by the government — exports declined by 125 million dollars in November 2017 according to PBS data.
Adil Sethi, 28, works for a company based in Sialkot that exports leather garments. Earlier, they also used to import leather garments, which they don’t do any more. However, they still import buttons and zippers to finish tailoring their garments.
Sethi has continued to export his products without any significant trouble, but says that the average for the company’s profits is mixed and clients often resist increased prices of products.
He explains, “While, for example, previously our manufacturing cost for a garment was 3,000 rupees and we exported it for 40 dollars, now the same garment costs us 3,600 rupees because the manufacturing cost has become higher, with buttons and zippers becoming more expensive from importers. If we tell our customers we want to increase the price to 45 dollars, the customer doesn’t want to accept it, and we can’t make a profit on the old price,” Sethi says.
While exporters have doubtlessly benefitted from the increased rate of the dollar, exporters like Sethi nonetheless face mixed results due to their reliance on imported items used in product design. Many other home-grown businesses in Pakistan remain inextricably linked to raw or manufactured material coming from abroad.
Businessman Salman says that importers have been especially affected by the instability of the dollar because orders for imports are made months in advance. Government tenders, moreover, stipulate a permanent selling price for the following year, regardless of whether the currency fluctuates or the rupee devalues.
“At the end of the day, Pakistan is an import-based country,” says Salman. “We have more imports than exports. So whenever the rupee changes, the prices of products are increased. The first person to be affected is the customer, because what he buys exceeds his monthly budget, as he finds everything that has to be purchased too expensive.”
Local businesses are not the only sector to be affected by the depreciation of the rupee. Domestic flight prices have shot up, and those travelling to foreign countries have to pay more for hotel and living expenses because of the steep exchange rate.
Ahmad Jawed, 31, recently returned from a trip to Turkey. A pilot for PIA, Jawed travels both for business and pleasure, and finds he has to cut back on his travel budget because of the exchange rate.
“I chose to stay in a cheaper hotel [in Turkey],” Jawed explains. “If it was the previous exchange rate, I would have probably chosen a better hotel to stay in.”
Jawed also finds his future travels affected by inflation, even if he made plans months in advance.
“I’m going to France next month, subject to my visa,” Jawed said. “I’m attending Tomorrowland, a music festival in Lyon. I booked the ticket many months ago when the dollar was around 115 rupees. I asked my friend to get it for me. Recently, he came to Pakistan, and in paying him back, I had to pay the difference as well.”
Another segment affected by the depreciation of the rupee are students pursuing their education abroad, and their families who send money for tuition and expenses from Pakistan.
Eman Jafri, 18, gained acceptance to universities in Canada in June but decided not to go when she discovered her family couldn’t fund her education. “If I went to Canada, my mother would have to pay in dollars, while she earns in rupees.” Jafri says. “And since she doesn’t have a fixed income as a screenwriter, she can’t really fund me.”
Now studying at a private university in Karachi, Jafri has no regrets but wishes she could visit her sister, who has been studying in Canada for the past three years.
“It’s just the tiny things in life. I thought I was going to live and study with my sister, something I always liked,” Jafri recalls.
Jafri’s siblings (her sister in Canada and her brother, who studies in Prague) face financial difficulties because of the depreciation of the rupee, which leads to the family struggling to divide money among themselves.
“We are constantly watching the dollar. Did it fall, did it rise? Already, we don’t have a lot of financial planning because there’s no fixed income. We have no idea if in the next moment we are going to have enough to eat, or to spend for ourselves. How much do we have to cut down? Whatever we do would be at the expense of my brother getting the money. And my brother’s spending would affect us. It’s just a cyclical thing,” Jafri explains.
“We had to ask relatives to pitch in this time, and then we’ll stock up again,” Jafri says. “Payment for tuition is due every few months. We [my mother] had to pay 300,000 rupees for tuition, but then the dollar rose, and now it’s 400,000.
On the other end, students in foreign countries face a different set of struggles, often pursuing jobs to support themselves rather than relying on money sent from Pakistan.
Usman, 26, originally from Karachi, is pursuing an MBA in Belgium. In his spare time, he makes restaurant deliveries to make extra cash. In a year, he has seen the Euro shoot up.
“When I first came here, the Euro was trading at 120 rupees,” Usman says. “During that time, paying your fees and buying your ticket was okay. Now it’s almost at 158 rupees, an increase of more than 30 rupees. I used to ask money from my parents, as monthly allowance to spend on food, etc. But as the rupee begins to drop and the Euro begins to climb, you find out you just cannot make ends meet.”
Usman explains that his company does not treat its deliverers necessarily as employees, but application users. The deliverers are paid by the hour if they meet a certain quota of orders in a given time. Most of the people who work for his company where Usman lives are immigrants, refugees and non-EU students.
While he concedes the job is risky, he thinks it is still a better option than asking for money from home.
“I pretty much depend on this job now, for my rent and other expenses,” Usman says. “To ask for money from your parents has become the last resort mainly because of the exchange rate shooting up.”
Published in Dawn, EOS, February 3rd, 2019