Rupee unmoved as Government mulls a Regime of Regulatory Duties on Imports

Dollar started off October at a high note on Monday, gaining against the euro and other major currencies as investors nervously watched the Catalan situation in Spain.

The Dollar Index, which measure greenback against a basket of six major currencies, added 0.1 percent to 93.59. Greenback availability was expected to be thin on Monday, as China, South Korea, Hong Kong and India markets were closed for public holidays.

The euro edged down in the international markets, as situation in Spain unfolds into a political tussle between the Catalan region and Spanish Government. Scores were injured after clashes erupted between Catalan independence supporters and the State Police.

Rupee opened at 105.38 at today’s open in the local markets, closing the session at 105.42 at 01:30 pm. Rupee witnessed a change of 0.04 during the day. 

Fears for Rupee Devaluation were allayed as news piece released by Dawn News revealed that the Government is currently working on a new round of Regulatory Penalties on imports of certain items. 

The country has been suffering from a negative trade balance since 2003. The Dawn news report quoting their source on conditions of anonymity published that, “The government is trying to both incentivize exports and reduce imports by coming up with a regime of regulatory duties,” he said. “This is something they are working on and is likely to be announced soon.”

He said that, the duties will be targeted to curb the non-essential imports which is likely to include items like, Mobile Phones and Luxury Cars. He said that the fiscal situation in the country has been under stress, the government is looking for measures to decrease the deficit below 5.8% of the GDP. 

The government is in a conundrum of sorts as it reacts to the rising calls for Rupee Devaluation from different sectors of the economy. However, with Election year nearing, the incumbent Government may not like the resultant inflation that is surely to follow from the devaluation, if the government decides to go that way.