Jahanzaib Ashiq Satti
Pakistan is suffering due to Pandemic of irrationalities and these irrationalities are betrayed in the form of public policies that are continuously depriving the citizens of Pakistan from basic necessaries of life and lead them into sick man of south Asia. Few months back, it was portrayed that we are unable to give relieve to the people as our man playeri.e.Mr. Dar is not in the team and when he comes to Pakistan, he will fix all the issues specially Dollar but unfortunately at this time Dar’ Doctrine to control the economy did not work due toconventional approach of controlling dollarfor political reasons. To understand the doctrine of Dar you should first now that country foreign exchange reserves comprise of reserves with the state bank and reserves in the market i.e. banks, exchange companies etc. The purpose of reserves in the market is to meet the requirement of the country and market itself generate sufficient reserves to meet its demand. Moreover,reserves with the state bank are kept as lender of last resort, much the reserve kept in the state bank morethe powerful your currency is, but unfortunately when we see facts, we came to know that Mr. Dar manipulate the dollar rate by increasing the supply in the market from state bank reserves eventually the dollar rate automaticallycomes under control. As a result, reserves with the state bank decreases and ultimately it will decrease the valueof the currency andis deleterious for the country in the long run.In actual,market should increase reserves of the foreign exchange by increasing exports and decrease imports. Governmentshould incorporate efficient and effective policies and help state bank to increase their reserves to strengthen the currency. When we do analysis of FX Reserves we came to know that at the end of December 2022 the reserves with state bank was $5576.5 Million and reserves in the market is $ 5846.0 Million which means that state bank reserves are less than the market reserves as a result spread between official rate and open market rate is more than 30 rupees, as our currency is week due to low reserves with state bank and we are unable to pay the debt on time therefore our risk of default increases. when we compare it with the reserves of December 2021, we can clearly see that our reserves with state bank was $ 17686Million and reserves in the market was$ 6196.6 Million, it means that our reserves with state bank are more, and our currency is in better position, and we are able to pay the debts on time and spread between the official and market rate was less than 5 rupees.Recently government have took a rational decision of free float exchange rate which should be taken a quarter back to eliminate the risk of default. After this decision, there are more changes that IMF program will start again and other brother countries will also give loan to the country and ultimately our default risk will minimize with increase in reserves. On the other hand, there is cost of every thing so we have to pay it in the form of more taxes, increase in petrol prices which is increased by Rs 35 and expected more, increase in utility charges and it is expected that our poor people have to face inflation of 40 to 45%,eventually. “Allah ap ka Hami o Nasir ho”.
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