Rupee has attained its “optimal value”, no further need for devaluation: Dr. Miftah Ismail

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WASHINGTON: Pakistan’s de-facto Finance Minister Dr. Miftah Ismail in an interview to Bloomberg TV on Friday said the rupee had attained its “optimal value” and won’t require further devaluation.

Dr. Ismail stated the rupee had been devalued in two rounds recently, 5 percent in December 2017 and 5 percent in March this year.

The adviser to Prime Minister on Finance, Revenue and Economic Affairs said with inflation not worrisome, the rupee didn’t require any further devaluation.

The economic growth during the financial year 2017-18 stood at 5.8 percent, said Dr. Ismail and was slated to cross 6 percent in next financial year.

He added inflation was less than 4 percent, which provided the government with a lot of policy choices.

He added because of these recent devaluations, the rupee had touched its “optimal value” and the currency would remain stable.

With new power plants under China-Pakistan Economic Corridor coming in, Dr. Ismail voiced optimism that Pakistan would be able to achieve its growth target of 6.25 percent for next financial year.

When queried about Pakistan’s chances of being placed on the Financial Action Task Force (FATF) grey list, Dr. Ismail said the country would follow the guidelines that have been given to them by FATF.

Earlier, this week in a statement to the Financial Times, Mr. Ismail said the plan of issuing a Panda Bond was still in its initial stages and highlights the country’s increasing reliance on China for shoring its finances at a time when the forex reserves were declining.

The de-facto finance minister said the country had never issued a Panda Bond before but was interested in doing so and were currently exploring the rules and requirements.

Mr. Ismail told FT he was interested in floating the Panda Bond in the next financial year but wasn’t sure whether the timing would be workable for it or not.

He added the government hadn’t decided the amount it was considering raising. When asked about media reports claiming it could be around $1 billion, Mr. Ismail said: “$1bn is a very nice, round number that anybody can just float but I’ve really not even started thinking about it.”

Regarding the 10 percent depreciation of the rupee against the dollar since December, Mr. Ismail said the currency had fallen significantly in last four months and was enough to stem the rise in current account deficit for now.

The adviser to PM on Finance said, “This will hopefully increase in double digits my exports and my foreign remittances and also stem the tide of imports or slow down imports and I think that should be more than enough for now.”