ISLAMABAD : The Pakistan Economy Watch (PEW) on Wednesday said thecontinued decline in exchange rate has shattered the confidence of massesin the rupee which has triggered dollarization of the economy.
Dollarisation of the economy is against the national interests as itdamages monetary sovereignty, hurt the economy and leave central bankalmost useless, it said.
PEW President Murtaza Mughal said that the government and the central bankshould take concrete steps to de-dollarize the economy before it leavesrupee weightless.
He said that dollar is sold at Rs117 in the open market, forex reserveswith the central bank are below the level of twelve billion dollars whilethe trade deficit for the first eight months is 4.27 billion dollars overand above as compared to the last fiscal.
He added that frequent devaluation has pushed masses to convert theirsavings and profit into the dollar that cannot be countered throughencouraging statements of secret meetings with the currency dealers.
The continued fall in the value of rupee and lack of reforms as well asinaction can result in widespread rejection of the rupee, in the long run,he warned.
Murtaza Mughal said that one of the reasons for dollarisation is thenegative rate of return given to the depositors by the commercial bankswhich push them to prefer dollars to reduce the risk of inflation anddevaluation.
The government can’t stop dollarisation by issuing orders, it can only becontrolled by introducing long-awaited reforms and using positive economicmeasures like better regulations, enabling and transparent policies etc. -Agencies