KARACHI: The strong grip of the US dollar in both inter-bank and open markets pushed the rupee down further on Monday.
The dollar was traded at Rs229.82 in the inter-bank market on Monday — an appreciation of Rs1.64 — compared to the previous rate. The open market rate for the greenback, as reported by the Exchange Companies Association of Pakistan (ECAP), was Rs236, an increase of Rs1.5 on the first day of the week.
Talks in the market about the vulnerable exchange rate and the weakening of the rupee were more important than anything in the economy, particularly in the financial sector.
While the day-to-day rise in the dollar rate against the rupee reflects the failure of the government to get a hold on the liquidation of the local currency, it also shows that Pakistan has not been supported with foreign aid that could improve dollar inflows.
Currency experts fear drop in remittances
“After the IMF inflow of $1.16 billion, no inflow of dollars is disappointing while the flood has further damaged hope for economic improvement,” said Atif Ahemd, a currency dealer in the inter-bank market.
The government’s initial estimates of the loss due to flooding were around $13 billion. The Secretary General of the United Nations has asked the entire world to help Pakistan recover from the devastating effect of climate change while its carbon emissions are less than one per cent.
However, the government has yet to come up with any plan for the recovery of flood-hit people and the economy; it has not even asked the world to compensate for the losses it suffered due to climate change.
“The country will suffer on both external and internal fronts. The forced cut in imports has already slowed down the economy, while exports will see a drastic cut this year,” said Aamir Aziz, an exporter of readymade value-added cotton products.
“Fewer exports means fewer dollar inflows; fewer imports mean less economic growth and low revenue generation,” said Mr Aziz.
He said the dollar remained the focal point to judge the performance of the economy while the flash flood had a devastating effect on the entire economy; the flood failed to become the focal point for the economy and its stakeholders
The cotton crop of Sindh was lost while the overall production has gone down to its lowest level. A delegation of textile millers is visiting Tanzania to buy African cotton to keep their units running.
Some currency experts fear that the inflows of remittances could drop this year for many reasons, including inflation in those countries where Pakistanis reside. Pakistan receives approximately $31bn in remittances, the majority of which come from the Middle East, the United Kingdom, and the United States.
Published in Dawn, September 13th, 2022
