KARACHI: The State Bank of Pakistan (SBP) needs to develop a tool to monitor and assess the rupee-dollar parity in order to ensure fair exchange rate, experts said on Monday.
“The exchange rate has always been misaligned in Pakistan,” economist Nadeem Ahmed at the Social Policy and Development Centre said, speaking at a moot on exchange rate policy of Pakistan.
The Sustainable Development Policy Institute (SDPI), an Islamabad-based policy think tank, hosted the discussion. Ahmed stressed on structural reforms to align the country’s exports and imports policies with the future demand. “Exchange rate misalignment is a political issue.”
Head Policy Solutions Lab Sajid Amin at SDPI said rupee is devalued after every election to maintain the credibility of the incumbent government. “Exchange rate movements have long-term impact,” Amin said. “In the short run, the SBP has a major role to play in exchange rate alignment and making it favourable for exports.”
Country director Hammad Siddique at the Centre for International Private Enterprise said exchange rate fluctuations hurt the private investors’ sentiments, creating structural issues for them. “Because of bad exports performance, most of the textile exporters shifted to neighbouring countries, like Bangladesh,” Siddique said. “Government needs to bring structural reforms in the economy through consultation with the private sectors.”
Researcher Ammad Ali at Applied Economics Research Centre, University of Karachi said falling currency values of trading partners resulted in appreciating rupee. “The SBP needs to tackle the imbalance,” Ali added. Safia Minhaj of University of Karachi said Pakistan needs an import substitution policy especially for products in which it has comparative disadvantages.