KARACHI, June 18: Trade has strongly demanded revaluation of the rupee to resolve major issues confronting the economy and to bring down the cost of production to make exports competitive in the world market.

Unlike in the past when exporters used to generally demand devaluation of the rupee are now also keen to see the rupee to be revalued against the dollar.

The sudden change in the mindset has emerged after India about four days back revalued its currency against dollar.Another factor, which forced the trade and industry to think on these lines is the disappointment over the budgetary proposals for fiscal 2007-08. It is being generally felt by the industry that instead of checking rising cost of inputs the new budget introduced such measures which are bound to further increase the manufacturing cost.

Strong argument is being thrown by business leaders, who favour massive revaluation of the rupee. It is being generally said that revaluation of the rupee may make exports costlier but would definitely bring down the cost of production as well as inflation, which are currently two major ills confronting the economy.

Mushtaq Ahmed Vohra, a business leader, said that if the government took a bold decision of revaluation of the rupee against dollar it would benefit trade and industry as well as the common man.

However, he said a damage to export trade by revaluation of the rupee could be managed by fiscal measures and at least the current issue of high cost and high inflation could be checked.

He pointed out that in India after the revaluation of their currency the government had doubled the rate of Research and Development (R/D) rebate being given to the exporters. Similarly, Pakistan could take such measures, which could offset the negative impact of revaluation.

Chairman Pakistan Bedwear Exporters Association (PBEA) Shabir Ahmed said that presently emerging economies like India and Pakistan were confronted with high supply of dollar. It is not only building inflationary pressure on common man but was also widening gap between rich and the poor.

He said when a record amount of remittances of around $5 billion and foreign investment to the tune of $6billion was circulating in the market it must have its implication on the economy as a whole, which also means that there is over supply of dollar in the domestic market.

Advancing his arguments Mr Vohra said that if the government decided to revalue the rupee it would directly bring down the POL import bill, which is a major cause of high cost of production and inflation.

The country is expected to foot $8 billion POL bill for current fiscal. This means that for every dollar paid for import of petroleum products the local consumer ultimately pay Rs60-61 to a dollar. But if the government revalue the rupee to Rs40 or Rs50 to a dollar the cost of POL products will also come down.

It is the energy, which runs the wheel of the industry and if it is ensured at a lesser cost it will automatically have far-reaching impact on trade and industry, he added.

Presently, a trailer tuck charges around Rs60,000 to Rs65,000 for a goods load to Punjab and if the POL import bill is cut by adjusting dollar/rupee parity the haulage cost would also come down to around Rs40,000 to Rs50,000 depending upon the revaluation of the rupee.

It would have a chain or snowball effect on the economy and immediately the cost of manufacturing and end price of goods will also come down, which will also directly benefit the common man who is presently hard pressed with high cost of essential goods, Mr Vohra asserted.

Under the given circumstances this is the only way out to give relief to common man and also check the rising input cost of industry. The government would only have to take care of exports, which will become costlier. However, some fiscal measures could help to overcome export trade’s problem emerging out of revaluation of the rupee.