Rapid devaluation of Pak rupee will damage the economic cycle of the country besides scaring off international investors; therefore the State Bank of Pakistan should control this dilemma without wasting a single moment. "Devaluation will lead to lower industrial productivity, surge debts, harm already struggling exports, inflation hike, reduce the purchasing power of the masses that would pose serious challenges for the economy," said Lahore Chamber of Commerce and Industry (LCCI) President Malik Tahir Javaid here on Tuesday.

The sudden devaluation of Pak rupee has raised complexities for all economic sectors, he said and added that surge in dollar price will increase the import bill as all imported oil, raw material and other essentials will go high. The recent surge in the prices of the greenback will not only jack-up the cost of business but will also erode the profit margins, he added.

He said the State Bank of Pakistan needs 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 will help stabilize rupee and restore the confidence of the business community, he maintained.

Malik Tahir Javaid said that an unchecked increase in the dollar rate will multiply the cost of doing business and badly affecting the industrial, manufacturing and agriculture sectors as Pakistan has to import fertilizers, food items, oil, machinery and industrial raw material. The government should take immediate measures to arrest further devaluation of rupee to avoid more damaging consequences for the economy, he said.

The LCCI chief said though the weaker rupee benefits the exporters by giving them more rupees per dollar, but this benefit is neutralized by the costly imported inputs of manufacturing sector including textiles thus eroding the financial advantage of a weaker rupee. The economy is already under tremendous pressure owing to multiple internal and external challenges it has been facing for the last many years, he added.

He said that today almost all sectors of economy are in deep trouble and a further fall in value of rupee will cause more contraction in economic activities leading to a drastic cut in the tax revenue for the government. If the greenback continues its upward trend, it will certainly inflate import bill besides lowering the competitiveness of Pakistan's business and industry. Therefore, the government should get quickly into action to arrest this dangerous trend, he said. He suggested to the government to immediately introduce institutional reforms and curtail non-development expenditures for the sake of the country's economy and its people.

Copyright Business Recorder, 2017