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Govt working on mechanism on rupee devaluation: PM


ISLAMABAD: Prime Minister Imran Khan on Monday said the State Bank of Pakistan (SBP) did not inform the government before devaluing the rupee last week and they are now working on a mechanism to ensure this does not happen in the future.

In a meeting with TV anchors and reporters in the federal capital, the premier spoke about the country’s economic and security situation and revealed that he received a letter from US President Donald Trump earlier today. In the letter, Trump has asked Pakistan to play its role in Afghan peace talks which are aimed at catalysing an end to the 17-year invasion of Afghanistan by US troops, the premier told the journalists.

PM Imran also spoke about the current hike in the value of dollar and revealed that the SBP did not ask the government before devaluing the rupee. “I found out about the dollar hike through television.”

“Earlier as well when the price of dollar touched a record-high against the rupee, I was not informed beforehand. The central bank had devalued the currency and it’s an institution which overlooks these matters,” he added.

“We are now working on a mechanism under which the SBP cannot devalue the currency without taking the government into confidence first,” the premier further said.

Economic expert Muhammad Sohail said, “It appears that the central bank’s independence will be curbed or a system will be put in place under which the SBP will have to ask the Ministry of Finance before taking such decisions.”

“At the moment it seems like a strange development as the PTI had criticised the last government for influencing the SBP’s decisions and Finance Minister Asad Umar has repeatedly said that the currency and interest rates are to be determined by the central bank in keeping with market fundamentals,” he added.

The economic expert further said it is not unusual for the central bank to devalue the currency without informing the government beforehand. “In fact, this is in keeping with IMF’s demands,” Sohail added.

Another economic expert, Muzammail Aslam, said, “There was a lot of pressure from IMF. Further, SBP may have devalued the currency as a preemptive measure as maybe the money that the government had promised would be received from China and UAE may not come or may be delayed.”

There was extreme volatility in the currency market on Friday, when the rupee plunged more than 6 per cent at one point before paring a chunk of the losses. The US dollar hit an all-time high of Rs142 in the interbank market.

The rupee was trading 1 per cent weaker on Monday, at about Rs137.5 per dollar.