A strong dollar

Dr Ramesh Kumar Vankwani
Friday, Oct 07, 2022

The rapidly increasing value of the US dollar has had a negative impact on our national economy. The most important factor in determining the value of the dollar is demand for the currency. If there is a high demand for the dollar, its price will increase. In Pakistan, the reasons for the devaluation of the Pakistani rupee are not simple.

I was present at the recently held meeting of the National Assembly Standing Committee on Finance, where it was revealed that some banks were allegedly involved in the deliberate devaluation of the rupee as the free fall of the local currency helped them earn billions in profit. The governor of the State Bank told the committee that in the first phase, investigations were started against eight banks, and in the second phase, investigations were conducted against the rest of banks.

I believe that an increase in the value of the US dollar and the depreciation of the rupee is also linked with Pakistan-US relations. Historically, whenever our diplomatic ties with the US have been better, the value of the rupee has remained stable in Pakistan. At the time of independence in 1947, one US dollar was equal to Rs3 and 31 paisa.

By accepting the invitation to visit the US, the first prime minister of Pakistan Liaquat Ali Khan did not only devise a correct direction to our foreign policy but also helped stabilize the value of the Pakistani currency. However, when Ayub Khan imposed martial law in the country in 1958, one US dollar reached Rs4 and 76 paisa.

During the General Ayub era, Pakistan-US bilateral relations became cordial in every dimension, and the dollar remained stable until 1971. Later, the US was criticized for the East Pakistan tragedy, which resulted in the value of the dollar rising to Rs9 and 90 paisa by 1977.

President Ziaul Haq was also considered a close ally of the US, and the dollar remained around Rs10-11, but the value of the dollar reached Rs18 after his death in a plane accident. In the 1990s, the US was unnecessarily blamed by our politicians. Ultimately, the dollar reached Rs49.5 at that time.

General Musharraf was considered a close ally of the US as well. During his tenure, the value of the US dollar was Rs53 in 2000, and it reached Rs70.5 at the end of his tenure in 2008. However after his downfall, the US was portrayed negatively in our country's politics, especially from 2009 to 2018. The Salala check post attack, the Nato supply cutoff and the US operation in Abbottabad, all such incidents weakened our bilateral relations with the US, and the dollar reached Rs122 by 2018.

In 2019, during Imran Khan's regime, the value of the dollar increased to Rs150, and gradually reached Rs180 until the end of his government. The baseless and fabricated allegations of regime change led to further distance in Pakistan-US relations, resulting in the dollar reaching the highest level of Rs240 this year.

However, I am quite confident that the recent visit of COAS General Qamar Javed Bajwa to Washington will have a positive impact and the two countries will put an end to their misunderstandings. One pleasant effect of his visit could be seen on the value of the Pakistani rupee which has started strengthening. Earlier, Foreign Minister Bilawal Bhutto-Zardari also presented Pakistan's position in a comprehensive manner during his visit to the US.

The Pakistan Army has always stepped forward to defend Pakistan. Whether it is the borders of our country, ideological basis or economic challenges, our armed forces have always played a significant role.

If we want the dollar to remain stable, our politicians should not make any irresponsible statements that may damage Pakistan's diplomatic relations with the US or any other country. Otherwise its direct effect will be in the form of the appreciation of the dollar against the Pakistani currency.

The writer is a member of the National Assembly and patron-in-chief of the Pakistan Hindu Council.

He tweets @RVankwani