Strengthening rupee status quo in petroleum prices should’ve been maintained

Karachi, September 18, 2023 (PPI-OT): Mr. Irfan Iqbal Sheikh, President FPCCI, has maintained that the government should have kept the petroleum prices unchanged - given the incrementally consecutive gains of the Pak Rupee against dollar for the last 8 interbank sessions. The trend is visible for all to see that rupee value will further appreciate in the coming days due to the crackdown on speculative trading by commercial banks and in open and grey markets, he added.

It is pertinent to note that petrol prices have been jacked up massively with effect from September 16th from PKR. 305.36 to PKR. 331.36perliter, which is 8.5 %, and, for high speed diesel, price has been raised from PKR. 311.84 to PKR. 329.18 per litre; which works out at 5.6%.

Mr. Irfan Iqbal Sheikh stressed that the strengthening rupee must have provided the government reasonable cushion to absorb the recent uptick in international oil prices to avoid the domino effect of the hike in petroleum prices in the prices of all essentials and cost-push inflationary pressures.

FPCCI explained that rupee closed at 296.85 for a dollar in the last interbank session of the week, i.e. Friday and it reflects more than PKR. 10 to a dollar gain; which touched PKR. 307.10fora dollar on September 5th. It is pertinent to note that prominent economists agree that the rupee is still undervalued as compared to real effective exchange rate (REER) and will continue to strengthen if the ongoing regulatory and administrative measures persist.

Mr. Irfan Iqbal Sheikh, as President of the apex body, has apprised that FPCCI is under tremendous pressure from the entire business, industry and trade community of Pakistan that the government should be made to realize the multiplier effects of skyrocketing petroleum prices they have to bear vis-à-vis cost of doing business.

Mr. Irfan Iqbal Sheikh explained that the apex body forewarned the authorities a number of times over the last few months that they need to address the teething problems in the import of the Russian crude, i.e. handling of oil cargoes; adjustments required vis-à-vis refining processes and commercial transactional procedures to settle oil payments. Nevertheless, the authorities failed to listen to us; else, we would have more Russian crude by now, which is cheaper by a whopping 40 percent as compared to international markets today, he added.

Mr. Irfan Iqbal Sheikh added that the apex body appreciates the fact that monetary policy committee (MPC) of the State Bank has maintained the status quo in the key policy rate in its latest meeting; however, trade and industry is looking for a discounted and regionally-competitive export finance scheme (EFS); long-term financing facility (LTFF) and temporary economic refinance facility (TERF) rates to cope up with the economic instability; cost of doing business and restoring competitive equilibrium in its exports.

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