KARACHI: Adviser to the Prime Minister on Finance and Revenue Shaukat Tarin has said that satta or speculation has “definitely” played a role in the recent volatility in the foreign exchange market.
“Speculators are taking away Rs8-9,” he said while speaking at the groundbreaking ceremony of Naya Nazimabad Hospital on Sunday. He said rupee was currently undervalued against the dollar, noting that the actual rate of the dollar should be Rs166-67 as per the real effective exchange rate, a technical measure that compares the value of a nation’s currency against the weighted average of the currencies of its major trading partners.
“I’ve told the SBP (State Bank of Pakistan) that the exchange rate should move in both directions. Otherwise, speculators become active,” he said.
The exchange rate hit the record level of Rs178 in the open market on Friday while the inter-bank rate touched Rs175.73, another all-time high.
Shaukat Tarin says rupee is currently undervalued against dollar whose actual rate should be Rs166-67
Refusing to disclose the strings attached to the $3 billion promised by Saudi Arabia, he said the funds would become part of the SBP reserves “within a few days”. “Speculators will take a hit as soon as the International Monetary Fund (IMF) announces the resumption of its loan programme,” he added.
Mr Tarin claimed that he and his team negotiated far better terms than the ones negotiated back in mid-March. “We’ve said no to the IMF on so many things,” he said, defiantly. “I don’t want to speak about the IMF. They have complained to us. They don’t want commentary on it… You’ll get the good news soon,” he said.
The finance adviser acknowledged that the hoarding of commodities was taking place, which was causing a further increase in food prices. He urged people to whistle-blow and receive 10 per cent value of the confiscated items in reward.
He also accepted that cartelisation was taking place in the edible oil market. “There’s no check and balance. I’ve told the CCP (Competition Commission of Pakistan) to check cartelisation in the ghee industry. We have to strengthen the CCP. There’re so many things that we’ve asked it to look into. It takes a long time because of its lengthy procedures.”
Reiterating his claim about the higher pace of economic growth, Mr Tarin said the economy was expanding at a rate faster than the economic managers wanted it to grow. “It looks like the economy will grow more than 5pc [in 2021-22],” he said, adding that the economy was overheating.
The finance adviser listed 36pc growth in tax collections, bumper crops in agriculture, double-digit growth in large-scale manufacturing and rapidly rising imports as key reasons for higher than targeted economic growth in the current fiscal year.
“That’s creating pressures on our current account deficit and exchange rate. We’ve taken measures to cool it down. We’ve increased duties. We have to take the temperature down to ease the pressure on the exchange rate,” he said.
Talking about the Rs1.4 trillion relief programme for four million poor households during the next four years, Mr Tarin said that “Washington” has termed the initiative “revolutionary”. “They said they’d roll out similar programmes in other countries,” he quoted unnamed Washingtonians as commenting about the yet-to-be-launched relief package.
