On Wednesday (July 5), an unexpected financial event happened in the country. The Pakistani rupee went down by 3.1 percent in the opening hours of forex trade market, creating a shortage of foreign currency in the market as, in such situation, dealers and traders usually prefer to hold instead of selling the stock. By midday, the dollar had risen to Rs108.50, and when the market closed on Wednesday, the dollar stood at Rs108.25. This was the largest single day drop in the value of the Pakistani rupee in the last nine years. This sudden decline has shocked many economists across the country. Some believe that this surprising and intriguing fall of the Pakistani rupee might have been the result of a planned and concerted speculative attack on the Pakistani rupee by some people, who have a large amount of money, in order to make quick money. It is indeed the truth that Pakistan is having huge current account deficit that is expected to reach $8 billion by the end of the financial year 2017. Although this current account deficit is a big challenge for the country’s economic managers, the country has sufficient forex reserves to finance its current account deficit which will start improving once the heavy machinery imported during current financial year is installed and starts producing goods for the export market.
The Pakistani rupee has been reasonably stable during the last four years since this government came into power and the stability of currency has played a significant role in stabilising the country’s economy andit on the path of healthy growth. The country’s economic fundamentals are strong and the future potentials of economic growth are positive. Therefore, it can be believed that the devaluation of the currency that the country witnessed on July 5 is neither warranted nor justified and it is hoped that the Pakistani rupee will recover soon and stay stable.
Ejaz Ahmad Magoon