The government should announce its policy regarding devaluation of the currency so that the issue of artificial hike in the value of the dollar can be settled, a business leader said Thursday.
The silence of the government on the matter has provided an opportunity to the profiteers to earn undue profits and harm masses as well as the economy, said Atif Ikram Sheikh former President ICCI.
We are sure that government will not devalue currency but a formal announcement is awaited which has also pushed masses to buy dollars in the large numbers.
Atif Ikram Sheikh said that political uncertainty, depleting forex reserves, the financial health of the country, widening deficits are some of the reasons behind appreciation of the US dollar but rumors of the devaluation of the local currency are also working pushing the dollar to Rs107.40.
He said that the rupee has remained stable over the past two years as the authorities ignored the requests of exporters and repeated advice of the IMF for exchange rate adjustment.
The government should do something about speculative attacks on rupee which can result in free fall as witnessed in the month of July, he added.
The business leader said that experience shows that the exchange rate cannot be left to be set by a market afflicted by excessive speculative trading activity while the recent fall will push masses to buy dollar to save their savings while expatriates would be encouraged to use illegal channels for transferring money.
Currency devaluation will not only stoke inflation and make masses poorer but it would increase the cost of debt servicing as well as on investment based on imported capital goods, particularly for long-term infrastructure projects, he observed.
The business leader said that the continuous depreciation of the rupee since the 1970s has not helped the country to boost exports.