Thanks to the unarguably commendable performance by the present Government and especially the Finance Minister Mr. Ishaq Dar, the stage looks set for the fulfillment of the promise made by Mr. Dar. Dollar has depreciated against rupee which according to Finance Minister Ishaq Dar is that the country’s economy has performed well during the first eight months of the current fiscal year. He said a stable currency will have salutary impact on the economy of the country and prices of petroleum products are likely to come down as a result of the appreciation of the currency. He vowed that the dollar would come down further below 98 rupees in coming days as their efforts are underway to strengthen Pakistani rupee and maintain its stability in upcoming days. “With Allah’s blessings we honor, what we say, we deliver, what we promise we work in silence and wait for success to speak”, he remarked.
The revaluation of the rupee is, no doubt, a good development. The rupee appreciation indicates the revival of economy and would surely revive investor confidence in the economy and the local currency. It is all due to vision and guidance of the Prime Minister Nawaz Sharif and integrity in policies of the Federal Government that they are seeing these positive results. Government’s commendable economic performance has attracted the attention of global investors, not just of the portfolio variety but the more stable foreign direct investment (FDI) as well.
There are signs that inflation is likely to cool off, while the Pak rupee has stabilized considerably. The rupee revaluation is beneficial to the economy in many ways. It will reduce the external debt burden of the government, reduce the costs of imports — especially oil and food items — bring down domestic prices and attract foreign investors. In the recent period, the Government has unleashed a slew of reform measures to energize the growth process. It is commendable that despite political economy problems, the government has gone ahead with bold measures. The masses were seething with anger at the continuing erosion of their already low purchasing power. The poor masses would now be hopeful, who otherwise had started thinking that leaders of the PML-N were disappointing them, who had voted PML-N to power to lessen their difficulties and not to take note of their fictional statements; dejected and highly demoralized masses intended to see difference between their current and previous rule.
A relatively strong rupee can really become a boon provided the Government initiates measures to make use of the bulging foreign exchange reserves to trigger an investment boom in the economy. The country’s capital market is remarkably cheap with a price-to-earnings; it is likely to keep attracting foreign investment in coming days. Rupee is likely to appreciate in the near-term on the back of expected higher inflows into the country. It should also appreciate because the market is looking good with sound performance both in domestic and global equities, which will support inflows into the country; the State Bank of Pakistan should not intervene aggressively enough to stem the rupee appreciation. In order to keep the appreciation of the rupee within desirable limits, it should be routinely buying up dollars and mopping up the resulting liquidity by selling government securities. However, given the volatile nature of economic recovery and looming doubts on sustainability of economic stability, no one can sit and relax. No one can say with certainty that the worst. Our economic managers will have to continue their struggle for sustainable economic recovery.