Central bank to hike interest rates soon

F.P. Report

ISLAMABAD: Chamber of Small Traders on Sunday said erosion in the exchange rate has started fuelling inflation and hitting the entire population of the country. The announced and unannounced currency depreciation is not the key to the economic problems being faced by the country but it is beginning of some serious problems including instability, it said.

The inflation generated by currency depreciation is making lives difficult for the poor wage earners which will be not without political consequences as voters will be more willing to listen to alternative voices, said Shahid Rasheed Butt, Patron ICST.

Voters always listen to the opposition leaders when currencies fall and economies contract hitting the purchasing power of the masses, he added.

He warned that currency depreciation will increase the price of almost everything including oil, LNG, edibles etc. which can lead to social unrest while interest rate hike will hit business activities.

Currency depreciation which always results in inflation destroy real wages as well as accumulated savings in the banks as unsound money destroys society, he observed.

Shahid Rasheed Butt said that the central bank should have realized that some successful Asian countries had low inflation through a strong currency which also brought political stability and stopped the social unrest.

He said that some countries including Singapore overtly maintains a strong exchange rate to keep inflation down while Pakistan has failed to become an export powerhouse despite repeated devaluations on the directives of IMF.