Rupee depreciation termed unpopular

KARACHI: Saud Mehmood, chairman of the Taxation Sub-committee of SITE Association of Industry (SAI) has said that the association completely understands that rupee depreciation is an important step to curtail the spiraling current account deficit, a statement said on Wednesday.

It is an unpopular decision for any democratic government because it leads to inflation, which results in higher discount rate; thereby, curtailing demand, he added.

The government has shown maturity by taking a difficult decision to put the economy on the right track; however, SAI does not agree with the method used by the government as large, arbitrary fluctuations in the dollar rate resulted in uncertainty, which creates distortions in the market.

“If we take last day’s examples where some unfortunate importers bought dollars at 144, while the closing rate was 139, which resulted in unnecessary losses.

Moreover, uncertainty about the next round of depreciation creates a conducive environment for speculation that the rate could be 150, 170 or maybe even 200. Panic created by rumors harms the industry more than the depreciation itself, Mehmood said.