Monday, July 07, 2008, Rajab 03, 1429    

Dwindling purchasing power of rupee

THE rupee crossed Rs 70 to the dollar on Saturday, the weakest level ever, due to rise in dollar demand from importers and the country’s uncertain economic and political uncertainty. The rupee has dropped 13.8 percent this year as the economy feels the brunt of rising oil and food costs.
There is something more to the problem than meets the eye. That the rupee is losing its worth vis-à-vis dollar, which itself is shedding its value against leading currencies like Euro should be a source of concern for the policy-makers and the Central Bank that is supposed to oversee the monetary policy. No doubt, the country is passing through multi-pronged crises that are taking their toll but it is also a fact that Pakistan experienced more serious situations like that of 9/11 and those prevailing after nuclear blasts. The exchange rate remained somewhat stable despite those upheavals, which shows that there is something seriously wrong with the policies and approach of the Government. Credit goes to the previous Government which succeeded in maintaining the exchange rate below Rs 58 a dollar throughout its tenure only because of prudent monetary policies. Of course economic difficulties and political instability are the factors but here again the Government has to blame itself as it is deliberately prolonging the period of uncertainty. Speculators and profiteers are having field day because of inactive governance and lack of clear-cut directions. People are already under unbearable pressure of price-hike and loss of rupee value would make things worse for them, as all imported items would cost more. It is time that the Government winds up major political and judicial issues and concentrates on governance, which is the only way out of the existing mess.