ISLAMABAD: The Pakistan Business Forum (PBF) on Monday claimed that both interest and exchange rates were being kept artificially high without economic justification, and appealed to Prime Minister Shehbaz Sharif to ensure a correction to support growth and stability.
In a statement, PBF Chief Organiser Ahmad Jawad asserted that the fair value of the US dollar was around Rs260, while prevailing inflation warranted an interest rate of no more than 9 per cent.
He said the current exchange rate and borrowing costs were deterring economic activity and placing an unnecessary burden on the national economy.
Mr Jawad urged the prime minister to immediately address what he termed as “artificial control” of the exchange rate.
Forum says fair dollar value should be Rs260 and SBP policy rate at 9pc
“A correction of even Rs20 in the rupee’s value could significantly reduce both public debt and inflation,” he said, adding that historically, Pakistan had failed to restore the rupee’s value following periods of depreciation, which fuelled long-term instability.
He pointed to the current account surplus of $2.106bn in FY25, compared to a deficit of $2.072bn in FY24, as grounds for a downward revision in the exchange rate. The forum argued that the prevailing exchange rate of Rs283 per dollar was unsustainable and that meaningful relief would only come with currency stabilisation.
The PBF also criticised the current interest rate of 11pc, calling it unjustifiable given that the Consumer Price Index-based inflation had dropped to 4pc. It urged the State Bank of Pakistan (SBP) to reduce the policy rate to at least 9pc in its upcoming monetary policy announcement scheduled for July 30.
The forum noted that the government was paying 11pc interest on domestic debt totalling Rs50tr — a rate at least 5-6 percentage points above inflation — resulting in an annual fiscal burden of around Rs3tr. These funds, it said, could otherwise be channelled into public welfare and infrastructure development.
Lower interest rates, the PBF argued, would also enhance Pakistan’s export competitiveness in international markets. It added that the International Monetary Fund (IMF) itself advocates for aligning interest rates more closely with inflation.
The business forum further stressed the need to diversify Pakistan’s export base beyond textiles by exploring new industries and markets. It also urged the SBP to improve credit access for businesses in Balochistan under the upcoming policy framework. Mr Jawad concluded by expressing concern over growing frustration within the business community due to what he described as continued neglect of challenges faced by productive sectors.
He expressed hope that the SBP’s Monetary Policy Committee would adopt a growth-oriented and pragmatic approach in its meeting later this week.
Published in Dawn, July 29th, 2025
