No further rupee devaluation: Asad

ISLAMABAD: Finance Minister Asad Umar on Friday ruled out any further devaluation of rupee, as it had reached equilibrium against the foreign currencies and advised people against wasting their money buying dollars.

He was speaking through a video link at a listing ceremony of Interloop Limited at the Pakistan Stock Exchange (PSX). Umar said the rupee had reached an absolute equilibrium and now there was no need to devalue it any further. “The rupee was quite overvalued, causing significant losses to economy,” he added.

“The real effective exchange rate was at Rs127 in January, which has attained equilibrium as categorically noted by the State Bank of Pakistan,” he said. The rupee has lost around 33 percent of its value against the US dollar since December 2017 with pressure on balance of payments bringing down foreign exchange reserves level down to less than two months of import cover.

The country is currently in talks with the International Monetary Fund (IMF) for the 13th bailout deal since 1980s. The minister denied the impression that the rupee fall had something to do with Pakistan’s ongoing negotiations with the IMF for a possible loan programme, saying market fundamentals were the underlying force.

“IMF is not advising (us) to devalue the currency. Currency value is not even discussed with the Fund. The rupee must be aligned with the market fundamentals,” Umar said. He further said the Pakistan Stock Exchange (PSX) had not been able to play due role in mobilising investment and attracting public savings to the market.

“Make it attractive for people to come to the market,” he plainly asked the bourse’s management. On regulations, Umar said the market was over-regulated and was not serving any purpose.

“Multinational corporations make decisions in hours and yet there is no leakage of funds, but here it takes months for processing things and yet there is embezzlement and corruption,” the minister said.

“Stockbrokers and traders deal through bank accounts and banks have stringent KYC (know-your-customer) regulations and there is no need to repeat the process.” The finance minister said Pakistan’s economy was of no more than $350 billion, while the world economy was around $70 trillion.

“We need to tap that market otherwise our economy would not grow. We have to be part of the global community. If we don’t, then whatever security policy, foreign policy and financial policy we may adopt, we will live in isolation like North Korea,” said the minister. The minister said the government had taken tough decisions and addressed issues that had been pending for decades.

“The way we run the economy should match the global financial architecture and meet the global economic standards. The benefits would be substantial.” Umar said there had been so many complications in businesses after 18 Amendment and 7th National Finance Commission (NFC) award.

He said preparations for the NFC were underway and for the first time a working group on ease of doing business had been formed to facilitate the businesses. Farrukh Sabzwari, the SECP chairman, said the process for new listings had been eased and unnecessary requirements removed.