In defence of Mr Dar.

Just a disclaimer to start with that I am neither in touch with Mr. Dar nor have had a discussion with him lateAly. In general, I disagree with his overAall approach to economic governance in Pakistan and have been a regular critic during his previous and current tenures pointing out the policy flaws-by successive governments-that keep Pakistan's economAic development strapped to the floor. However, perhaps the only point where our views converge is on the needAless urge and advice by variAous economic experts to unjustifiAably keep on devaluing the Pak Rupee. Of late there has been an article by Atif Mian doing the rounds and in addition, we have heard some rather silly outAbursts by our previous finance minisAter Miftah Ismail, making a case for the market-based exchange rate, as if the current interbank rate is an unreal one and needs to be brought in line with the open market rate, which as of today has a differential of almost around +10 perAcent on the interbank rate.

Personally, despite being a leading naAtional exporter, I couldn't disagree more with the two gentlemen and for good reasons. To start with at 230, the REER is still under 100, which in essence means that the PKR's pegging seems reAalistic, but more importantly what one needs to understand is that there is no way the government at this stage and in such an uncertain environment can reAduce the differential between the open market and the interbank rate, the moAment you devalue the rupee to 260, the open market will jump to 290 or even 300-it would be a grave mistake.

Unfortunately, the PKR is not a freely tradeable currency and given the relucAtance of even our currency swap partAners to exercise the arrangement, the value is practically perception driven. The primary factor though driving the dollar demand is that regrettably, the Pakistani market turf is being used as a playground for Afghan businesses. EvAerything from coal to dry fruits to conAtraband items to motor cars to drugs trade freely in Pakistan with PKR being the underlying purchase currency. NatAurally, when the sale revenues have to be repatriated back to Afghanistan or even in some cases Iran, the pressure mounts on the USD supply in the open market with a demand that far exceeds the supply sources, thereby pushing up the differential to what we see today.

The entire process is so intertwined with imagined strategic security depth, a segment of Afghan population that is based in Pakistan but bears no...