Advisor to Silk Bank Chairman, Shaukat Tarin has shared his views about the current valuation of Pakistani currency and said that the rupee is overvalued by 10%. Concerned authorities have not allowed the currency to take its own position which is resulting into an increase in the country’s external debt.
Former Minister of Finance, Ishaq Dar was a firm supporter of a strong rupee and maintained its value at Rs. 105-106. Speaking at a press conference organized by Silk Bank, Shaukat Tarin said that other countries in the world have been depreciating their currencies against the dollar but Pakistan has failed to do so.
He said that due to currency being overvalued, exports are taking a hit having a negative impact on the external trade of the country. Tarin believes that if the currency is devalued by 10%, exporters will be able to gain advantage out of it which in return would help in controlling the current account deficit of Pakistan.
Current account deficit of Pakistan is a major reason for the decrease in foreign currency reserves of the country which may create problems related to balance of payment for the State Bank of Pakistan. Tarin, during the press conference, emphasized that exports need to be promoted and that can only be done if rupee loses its value by at least 10%.
Tarin said that countries adjust their exchange rate from time to time, something that Pakistan has failed to do so in the recent times. Back in July, Pakistani rupee depreciated by 3% as acting SBP governor allowed the rupee to determine its own value. But Ishaq Dar, Finance Minister at that time, sprang into action to bring the rupee back to its original position of Rs. 105.
The increase in the value of dollar all over the world has been due to the slowdown of major economies like China according to Tarin. Talking about Silk Bank, the former Finance Minister said that the bank would add 35 new branches this year. He also said that Silk Bank is expanding towards Islamic Banking side and 50% of their new branches in the next three years will be Islamic banking branches.