Devaluation to activate another price hikes wave.

KARACHI -- The unprecedented 10.6 per cent rupee devaluation in a single day on Thursday would not only trigger a new wave of price hikes but the expensive loans after the interest rate hike would hit industrial activities, warned trade and industry leaders on Thursday.

They said a weak rupee would increase the landed cost of imported goods and industrial raw materials and would make the life of inflation-hit people more miserable.

Earlier this week, the State Bank of Pakistan (SBP) had raised the interest rate by 100 basis points to a 25-year high of 17pc to tame inflation but the latest currency devaluation would limit the impact of the SBP's efforts to check food prices.

Korangi Association of Trade and Industry (Kati) President Faraz-ur-Rahman feared the petrol prices may touch Rs300 per litre in near future.

'Costly borrowings after the interest rate hike and 10pc rupee fall, it will be hard to run the industries which means the closure of industries and loss of jobs,' he warned.

However, he was of the view that this was the last option to remove the cap on the exchange rate which should have been done by the former finance minister Miftah Ismail. The step to bring the difference between the open market and interbank rate closer was taken under some compulsion as there were...