by Kaswar Klasra
ISLAMABAD, Feb. 8 (Xinhua) -- Arshad, a resident of Pakistan's Rawalpindi, was surprised for the price's stir-up in a Honda dealer's. The price of her fancied car was raised by 50,000 rupees, just compared to December last year. "How they can raise the price by 50,000 (about 450 U.S. dollars) rupees within a month," she wondered.
"Honda delivered same variant of car to my friend last year on Dec. 31, 2017 at rate of 1.689 million rupees. After a month, they are demanding 1.73 million for the same car," she told Xinhua. While, Haji Muhammad Shahzad, chairman of All Pakistan Motor Dealers Association, justified the raise.
The price hike in automobile sector in Pakistan came after a big slump of Pakistani rupees since Dec. 8 last year. Within three trading days, the rupees depreciated around 4.8 percent against the U.S. dollars, making it one of the worst performers in the forex market. The price of rupees waned from around 106 to about 113 against 1 U.S. dollar in the open market.
"Pakistan's auto industry is sensitive to rupee depreciation for its high dependence on imported raw-material and parts that become expensive with the fall in the currency's value," Shahzad told Xinhua.
At the meantime, the weaker rupee also compelled the country's oil and gas regulatory authority to recommend an increase in petrol price by 2.98 rupees and diesel by 10.25 rupees per litter respectively on Jan. 30.
Ashfaque Hasan Khan, dean of the School of Social Sciences and Humanities at National University of Science and Technology, said that a rupee devaluation has little benefits but more cost. "A weak rupee against U.S. dollar simply means price hike. Prices of petrol, diesel, edible oil pulses, shampoo and other daily use items may go up."
According to Pakistan Bureau of Statistics (PBS), the country's total import during the second half of last year 2017 stood at 28.94 billion U.S. dollars as compared to 24.32 billion in the same period in 2016, marking an 18.99-percent increase.
However, economist said that a weakening Pakistani rupee has its positive side on the Pakistan economy, although it is bad news for the import sector. They believed that certain sectors including overseas Pakistanis, exporters and business process outsourcing would benefit from a cheaper rupee.
With cheaper rupees, families of overseas Pakistani workers could have more money to buy goods and exporters can earn more from their export products. Some eight million Pakistani expatriates remitted more than 19.91 billion dollars in the fiscal 2015-16.
According to the Pakistan's central bank, remittances stood at 9.74 billion dollars during the July-December period in the fiscal 2018. The central bank expected that remittances at this rate for the full fiscal 2018 can reach a total of 20.4 billion dollars, the highest ever.
Similarly, a weakened rupee gave edge to Pakistan's exporters who are cashing in on the opportunity following the depreciation which makes their products less expensive so that helped them gain competitiveness against other regional players including India and Turkey.
"Rupee devaluation will make textile exporters to gain competitiveness in international market," Shahid Sattar, advisor to All Pakistan Textiles Mills, told Xinhua. "The rupee's devaluation is a positive signal for all Pakistani textile exporters."