Dollar price increase has the Pakistani public worried and rightly so. All of our economics is linked with the dollar rate and pretty much our entire lives are affected by it.
The dollar price increase has gone upto 164 Pakistani Rupees and analysts say that it may go upto 200 Rupees by the end of this fiscal year. This will increase everything, from import bills to inflation. Spending power will go down, there will be salary cuts and just everything will get expensive for the masses. Petrol prices will inevitably rise too and that will make everything even more costlier. Since fuel is what runs industries, directly, or indirectly.
But it doesn’t end here. Unfortunately, 70% of our domestic consumption is based on imports, so its direct impact will be on the general public consumers too, which means that the actual rate of inflation will be even higher than what the Pakistan Bureau of Statistics will report.
Now combined with all this, consider the up to 190% increase in gas prices, which will impact electricity too. IMF also wants us to increase power tariff by 25%. Imagine where the prices will go now.
According to Forex Association of Pakistan President Malik Bostan, “In the State Bank of Pakistan’s view, the recent movement in the exchange rate reflects the continuing resolution of accumulated imbalances of the past and some role of supply and demand factors.”
The bank said the “inflationary pressures are likely to continue for some time”, but added that it “will continue to closely monitor the situation and stands ready to take measures, as needed, to address any unwarranted volatility in the foreign exchange market.”
The rupee began its downward spiral in May on the back of the signing of a bailout agreement with the International Monetary Fund (IMF). The IMF had, in its statement on the programme, referred to a “market determined exchange rate”, which the financial markets did not take very well.