Pakistan must convert a major chunk of its foreign exchange reserves into Euro to save rupee from shocks of a possible further decline of greenback against the emergent Euro-zone currency, proposes a senator.
"It doesn't make much sense to rely on dollar heavily when it is falling against other international currencies," Senator Liaqat Bangalzai said on Tuesday as the upper house continued an inconclusive debate on price hike for third day.
The suggestion came as less than a decade old joint currency of over a dozen European countries continued to rise against the US dollar as a reaction to surging American trade deficit and half-diminished fears of recession in the world's largest economy. The proposal was discussed in Pakistan on some fora in the past but never considered at official level, primarily due to political reasons. Bangalzai also called upon the government to alter exchange rate regime by ending the pegging of rupee against dollar.
Another member termed the recent decline of Pakistani currency the American one the biggest challenge for the country's economy with a potential to push it into deeper crisis. The rupee plummeted to a fresh multi-year low against the US dollar last week in the open currency market. The dollar opened at Rs 68.30 (buying) and Rs 68.40 (selling) on Tuesday.
In past month after swearing-in of new government in March, local currency had been on the freefall and declined against dollar from Rs 62-63 of early April. Senator Haroon Akhtar Khan held recent statement of now-retired Finance Minister Ishaq Dar on the weak health of the economy responsible for the situation.
Dar has been saying after taking over that Pakistan's economy was facing an overrun of more than Rs 500 billion in this financial year and fiscal deficit might cross an alarming ratio of 9.5 percent of GDP.
Akhtar opined the stock and forex markets were influenced more by speculative reasons than the technical ones and Dar's repeated assertions might have shattered investors' confidence. "This is the crisis of the government's own making and if not controlled at this stage can get worse," Haroon, an industrialist himself, flashed an alarm light.
The warning came as the central bank struggled to get onto the situation. The State Bank of Pakistan (SBP) has recently come up with several measures to reverse the trend but none of them produced results. Both officials and experts are expecting more steps shortly.
AGRI RESEARCH: Several senators also called for raising the standards of agriculture research to equip Pakistan fight surging food needs of its increasing population touching almost 170 million now. Out of the box thinking was the phrase Senator Akhtar used to describe how, according to him, the government should respond to overcome food crisis.
One way, he suggested, was to focus more on agricultural research institutes and organisation to enhance production. "There is no way out of this situation," he asserted. Senator Kamran Murtaza said he did not see political will behind the coalition government efforts so far to control unbridled prices he pointed out hitting the poor hardest.
Several other lawmakers from both sides also spoke on the issues before the house was adjourned till 0930 hours on Wednesday morning. Earlier, the upper house adopted a unanimous resolution to condole with the Chinese people and the government on a killer earthquake that had stricken the country on Monday.
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