HOW CURRENCY DEPRECIATION CAN DAMAGE PAKISTAN’S ECONOMY?blogger2 May 23, 2019 0 COMMENTS
Depreciating currency means the value of the home currency is falling against foreign currencies. On this regard, the currency is compared to the US dollar. The depreciation of Pakistani rupee isn’t a new experience for the economy. The Pakistan Rupee reached an all-time high of 151.75 in May of 2019. The lowest record was 18.60 in December of 1988. The value of the dollar is expected to further rise because of the loan agreement of Pakistan with the IMF.
The ongoing event of currency depreciation is not a good sign for the economy. The depreciation can impact foreign payments and the burden of debt can further increase. The damage can target the economic and social development of the country.
With the declining value of rupee, the price of imports for Pakistan will increase. Also, the devaluation can result in higher inflation rates and in order to control the inflation rates, the government has to raise interest rates. This may cause the economy to grow slowly and as a developing country, Pakistan cannot afford further slowed down the economy. So, one can say that the overall economic conditions are not good.
The currency devaluation is a challenging scenario for the current government. The nation can only hope for betterment in the longer-run.