Rupee Devaluation To Disrupt Economic Cycle: LCCI

Devaluation of Pak rupee will disrupt the economic cycle of the country and scare away international investors; therefore

LAHORE, (UrduPoint / Pakistan Point News - 12th Dec, 2017 ) :Devaluation of Pak rupee will disrupt the economic cycle of the country and scare away international investors; therefore, the State Bank of Pakistan (SBP) should control this situation.

Lahore Chamber of Commerce and Industry (LCCI) President Malik Tahir Javaid, Senior Vice President Khawaja Khawar Rashid and Vice President Zeshan Khalil said in a statement here Tuesday that sudden devaluation of Pak rupee has raised complexities for all economic sectors as surge in Dollar price would increase import bill because all imported oil, raw material and other essentials would go high.

They said that recent surge in the prices of the greenback would not only jack-up the cost of doing business but would also erode the profit margins. They suggested the SBP to ascertain the factors weakening the value of rupee and check the possibilities of undue speculations and malpractices in the operation of foreign exchange markets in Pakistan.

This would help stabilize rupee and restore the confidence of the business community, they added. LCCI office-bearers said that an unchecked increase in the dollar rate would multiply the cost of doing business and badly affecting the industrial, manufacturing and agriculture sectors as Pakistan had to import fertilizers, food items, oil, machinery and industrial raw material.

Government, they said, should take immediate measures to arrest further devaluation of rupee to avoid more damaging consequences for the economy. They said though the weaker rupee benefited the exporters by giving them more rupees per dollar, but this benefit was neutralized by the costly imported inputs of manufacturing sector including textiles thus eroding the financial advantage of a weaker rupee.

The economy, they said, was already under tremendous pressure owing to multiple internal and external challenges it had been facing for the last many years. They said that today almost all sectors of economy were in trouble and a further fall in value of rupee would cause more contraction in economic activities leading to a drastic cut in the tax revenue for government.

LCCI office-bearers said that if the greenback continued its upward trend, it would certainly inflate import bill besides lowering the competitiveness of Pakistan's business and industry. Therefore, government should get quickly into action to arrest this dangerous trend.

They suggested the government to immediately introduce institutional reforms and curtail non-development expenditures for the sake of country's economy and its people.