Representatives from Pakistan’s value-added textile sector recently opposed a government proposal to let the Pakistani rupee depreciate further, saying it will push up cost of imports rather than boost exports. Rupee depreciation will increase the cost of imported raw materials, such as dyes and chemicals, used in manufacturing of goods for export, they feel.
Devaluation of currency can help only once while foreign buyers demand discounts, said Jawed Bilwani, Chairman of Pakistan Apparel Forum, which represents Pakistan Hosiery Manufacturers and Exporters Association, Pakistan Readymade Garments Manufacturers and Exporters Association, Pakistan Knitwear and Sweater Exporters Association and Pakistan Cotton Fashion Apparel Manufacturers and Exporters Association.
Foreign buyers took, in the form of discounts, half of the advantage of the 5 per cent rupee depreciation in December last year, while prices of imports went up by more than 70 per cent, reports quoted Bilwani as saying. Bilwani said the government should bring down the cost of electricity, gas and water and quickly settle billions of rupees in refund claims of exporters related to sales, income and duty drawback to improve exports. If the government still desires to devalue the currency, it should be depreciated gradually, he added.