Wisdom behind Moody’s report questioned
Situation in Pakistan will improve soon: Dr. Mughal
Pakistan Economy Watch has questioned wisdom behind report of US based Moody’s Investors Service which has claimed that rupee will run down to 78 against US dollar in two years.
Rupee is stabilizing since the State Bank of Pakistan has taken some stringent measures and the recent report by the agency failed to dent the currency, said President of Pakistan Economy Watch Dr. Murtaza Mughal in a statement issued here Monday.
The rupee remained stable despite warning which proves that market forces have rejected the report, he added.
The rupee remained stable at on Saturday and Monday against the dollar despite the controversial report.
The author of the report — Aninda Mitra, a Moody’s VP can be a good storyteller rather than analyst, said Mughal adding that how come anyone guesses that current economic and political situation in Pakistan will remain tense over the next two years and rupee will continue to slide.
He said that the political and economic situation in Pakistan is not very weak and it will improve soon as Government is trying best to fix things. Moreover Pakistan will remain important on the international geo-political scenario. Peace agreements are working well and peaceful Long March has subsided worries of business community. Restoration of judges is also in sight and masses are hopeful about situation.
The credit agency in a report said Friday that the rupee would drop to over 70 against the dollar in the upcoming fiscal year 2008-2009, strike 75 by next fiscal 2009-2010 and eventually over and above 78 by fiscal 2010-11.
An expected interest rate increase by State Bank of Pakistan in the running month and inflows from foreign countries is keeping the rupee in control, said Dr. Mughal.
He said that SBP should raise rates to further strengthen rupee and help vulnerable depositors who have been getting negative interest since the ‘revolutionary’ policies of former PM Shaukat Aziz were introduced in this sector.
“Government should focus on fiscal consolidation, debt reduction and restoring private investor confidence as the report is taken seriously in many quarters,” warned Dr. Murtaza Mughal.
Investment policy should be made friendlier; large inflows of foreign direct investment should be encouraged with more relaxations and remittances from overseas workers should be made trouble-free, observed Pakistan Economy Watch.
