More than 30 percent depreciation of rupee against dollar since the beginning of 2008 has almost halted economic growth in the country, badly hitting all the important areas of economy from agriculture to industry; manufacturing to import of goods; IT sector to students studying abroad and government should take immediate measures to arrest further devaluation of rupee to avoid more damaging consequences for the economy.

This was said by Mian Shaukat Masud, President, Islamabad Chamber of Commerce & Industry (ICCI) in a statement. He said depreciation of the rupee is multiplying the cost of doing business and badly affecting the industrial, manufacturing and agriculture sectors as Pakistan has to import fertilizers, food items, oil, machinery and industrial raw material.

He said though the weaker rupee should benefit to exporters by giving them more rupees per dollar, but this benefit is neutralized by the costly imported inputs of manufacturing sector including textiles thus eroding the financial advantage of a weaker rupee.

Mian Shaukat said that our economy is in slump as all sectors of economy are showing negative growth and warned that further fall in value of rupee will cause more contraction in economic activity leading to reduced tax revenue for government and huge foreign debt.

ICCI President wondered that the decline in the exchange rate goes on in spite of the fact that foreign exchange reserves have almost doubled, which should be a cause of great concern for policy makers.

He said in this scenario, depreciation of the rupee at its current pace won’t push up exports, rather will certainly inflate import bill and inflation that, over the years, became closely linked to the exchange rate because of Pakistan’s ever higher reliance on imports, particularly of energy inputs.

Faster the depreciation of the rupee, higher will be inflation and lower the competitiveness of Pakistan’s business and industry. Therefore, government should get quickly into action to arrest this dangerous trend to bring stabilization in exchange rate to protect national economy from further damage, he stressed.