KARACHI, Feb 12: State Bank of Pakistan Governor Dr Shamshad Akhtar has firmly ruled out any possibility of devaluation of Pakistani currency and declared in categorical terms that “we will continue with the current system of exchange rate.’’

“We will not like exchange rate to be destabilised,” the governor warned currency speculators while speaking to members of the All-Pakistan Textile Mills Association (Aptma) on Tuesday in which members from Lahore and Peshawar also participated besides those present in the Karachi office.

“Rupee has depreciated in value against dollar,” she asserted, while making it clear that it was not a devaluation when someone pointed out that rupee-dollar parity was somewhere Rs62.80 recently.

She recalled that for almost two years, the rupee-dollar parity showed consistency, but from November 2007 when oil import bill went up to 915 million dollars, trade deficit increased and expanded the current account deficit.

In December, the oil import bill claimed another 920 million dollars, she pointed out and warned of this trend showing no respite in future also because “we now consume much more oil than previously.” Hence, payments on account of oil imports are also higher and its resultant impact was on exchange value.

Coupled with the rising oil bill was the market sentiment because of promulgation of state of emergency on Nov 3 which gave some room to speculators to play their game.

Responding to a suggestion that business be given facility of foreign exchange borrowing, the State Bank governor disclosed that it was on Tuesday morning that she approved one such case after making full assessment.

“We can consider such requests on case-to-case basis and if found competitive and viable, there is no reason to deny this facility.”

Mr Qasim Nawaz, a director of the SBP, informed Aptma members that a sum of Rs3.2 billion had already been reimbursed to textile mills against approved amount of Rs6 billion under the long-term financing arrangement.

“The international environment is getting worrisome,” Dr Shamshad Akhtar remarked, while speaking about the sub-prime mortgage crisis in the US which was now impacting Europe also and had started affecting countries, like China, Malaysia, Philippines and Indonesia that depend heavily on US market for their electronic goods export.

“Thank God, Pakistan and a few other countries are so far insulated from the affect of this crisis,’’ she said, but wondered as to “how long’’.

She said that a large sector can fight the situation and meet challenges. “You try to realise the privileges you enjoy,’’ the governor reminded them of incentives and subsidies.

Aptma chairman Iqbal Ibrahim held government’s excessive borrowings mainly responsible for mounting inflationary pressures.