Finance minister Asad Umar put the blame of recent depreciation of rupee on the previous government of PML-N. The US dollar, which was being traded at Rs134 yesterday, opened higher at Rs142 on Friday while the local currency further devalued by Rs2 to Rs144 before setting to Rs140 at midday.
Asad Umar Defending the decision of devaluation of rupee shifted the blame onto the PML-N government, saying the devaluation was imminent due to the flawed policies of the previous PML-N regime.He added that the devaluation was necessary because of a number of reasons, including increased foreign loans, decreased foreign exchange reserves, low exports and artificial cap on the value of dollar.
Rupee value cannot be controlled forever. Even during the PML-N’s tenure, the value of rupee against dollar had reduced by Rs28,” he said. “We artificially increased the value of rupee by purchasing dollars. As a result, we started importing vegetables and we were unable to export surplus sugar and wheat without providing subsidiary,” he said.
“The issue of dollar is associated with supply and demand,” he said, adding that the former government provided subsidy to foreign traders and taxed the locals. “The gap between supply and demand of dollar will remain until we address the issue of production and foreign investment.”
“We had two options; either to continue the old practice of artificially controlling the value of rupee [or to devalue the rupee],” the finance minister said. While admitting that devaluation was “not a good thing” as it increases inflation, Umar concluded: “The value devaluation coupled with other policies will produce positive results.”
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20 February, 2019