Chaudhry Imran sells and buys cars in Lahore. Talking to Urdu News, he said, “There is no shortage in the invoice we get for fixing the rates of vehicles on a daily basis. Large companies and their franchisees have a monopoly on car pricing and they set the rates.
"If the dollar goes up by even one rupee, a new rate invoice is issued the next day," he said. But when the dollar goes down, it doesn't go down. The car I had for Rs 27 lakh is now worth Rs 43 lakh. Now that the dollar rate has come down, I get daily calls from customers asking if car rates have come down or not because the dollar has come down, so my answer is no.
"Not once in 15 years has the dollar depreciated," he added. Meanwhile, the dollar also returned to Rs 85, but car prices have not changed.
Inflation in Pakistan is probably an issue on which both the government and the opposition agree. Since the PTI took over the government, the biggest challenge has been inflation. Similarly, the depreciation of the Pakistani currency and the rise in the dollar rate are also a major factor in bringing inflation to this level. By October, the dollar had reached 168 Pakistani rupees in the open market.
This high flight of the dollar affected the price of everything that is imported. However, the dollar has started depreciating over the past two weeks and by the evening of Friday, November 13, it has come down to Rs 159. In other words, in two to three weeks, the dollar has become nine rupees cheaper. But the interesting thing is that the price of nothing has come down.
Why is there no immediate benefit to a reduction in the dollar rate?
It is not just about cars, but everything that is imported into the country is affected by the rise in the dollar rate, but when the rate goes down, the fruits of the reduction in prices do not reach the people.
Speaking to Urdu News, Luqman Jajja, Director, WBM International, said, “Commodity prices do not come down because the dollar rate falls because it is a complex process. Importers import a lot of goods and stock them in warehouses, which balances the demand and supply system. The rate at which he bought it will never decrease.
"There is no doubt that the dollar rate has pushed up prices," he said. Four hundred grams of Nutella has gone up from Rs 325 to Rs 460. A can of Red Bull has gone from Rs 225 to Rs 270. Right now I am telling you the importer rate, if you add 25 to 30 percent retail on it, it will be the rate that the average consumer will get.
Now how can an importer who has bought this stock at the old dollar rate sell it cheaply. And there is no guarantee from above that the dollar rate will not go up again after two days. So prices are not coming down because of this uncertainty.
Dr. Qais Aslam, who has a keen eye on the Pakistani economy, believes that Pakistan's rotten system is the reason why there is more inflation than the actual inflation.
"It simply came to our notice then. You can't compete with the tools of the 21st century with the tools of the 19th century. This will continue to happen in Pakistan as long as consumers are not part of the oversight system in the supply and demand system.
"As the dollar goes up, things become more expensive immediately and when it goes down, there is no one to ask," he said. It is the job of the FBR and other departments to keep a close eye. When there is a detailed record of everything that is imported. If there is a record of selling it, then the public can be easily saved from artificial inflation. That is, the benefit of the dollar going up can be adjusted in the same proportion as the importer sits down.
Dr Qais said: "One of the complexities is that Pakistan's own industry is also heavily dependent on imported raw materials. The chemicals industry, pharmaceuticals and all kinds of machine parts, etc., that is, even locally made things, are somewhat linked to the fluctuations of the dollar rate in a cycle.
This is a million dollar question in itself. In the current economic system of Pakistan, will the dollar, which is now at 159, go down further or to what extent are the chances of re-inflation?
In this regard, Urdu News spoke to Malik Bostan, President of the Exchange Companies Association. And I have good reasons to say that. Before the Corona era, the price was 155. I am talking about January-February. With the arrival of Corona, investors from Pakistan raised سا 3.5 billion in the form of investment bonds, which created an artificial shortage and the dollar touched Rs 170.
"In fact, the demand for dollars to meet those three and a half billion dollars was so high that the rate went up. That process is now complete. The demand for dollars is now over. So it's coming back to its original value. Because the rate hike above 155 was not due to the depreciation of the rupee.
According to Malik Bostan, recent measures by the government, including a reduction in the Roshan digital account and current account deficit, have also brought down the dollar.
"When you free people from the bank and facilitate them, they are easily sending dollars into the country. In the same way, in this policy you have given a guarantee that you can take back all the dollars you are sending without any NOC, which has also increased the confidence of the people. So I don't think the dollar will go up in the current market situation. If there is no emergency or law and order situation, God willing.
However, economist Dr Qais Aslam does not see the dollar depreciating in an encouraging manner. "The government raised the value of the dollar under a well-thought-out plan and it is an idea to convince Pakistanis abroad that you can earn more by sending less dollars," he said. Such schemes are successful when you use that money to increase productivity and increase exports.
"But the easiest investment of dollars that people send from abroad is in property, which does not benefit the country. It is called portfolio investment in English." On top of that, you issue policies to encourage the construction industry, which has the exact opposite effect of your dollar policy. This contradiction does not actually allow the economy to move forward.
For one thing, all experts and businessmen agree that a rise in the dollar has led to an increase in inflation, but a fall in it deprives the people of its benefits, and this will continue until the economic system is completely transformed.
