ECONOMY:Pakistan should diversify into a basket of
currencies.
Pakistan's Currency's Downwards
Spiral
HOW TO SAVE THE SPIRALING RUPEE?
By Saad Sarwar Muhammad
Saturday, April 26, 2008

Pakistani rupee has been spiralling downwards against the dollar in the past few weeks touching Rs. 65 to a dollar. This at a time when most currencies in the world, including those of the developing countries are showing a rise in value to the dollar. Some of this decline can be attributed to Pakistan’s swelling trade deficit along with the price hike of oil touching an all time level of $120 to a barrel. This trend is difficult to arrest unless concrete measures are taken to stop the import of exotic food items which the general populace can live without, such as foreign juices, cheese, chocolates etc. Also, the import of items of luxury which do not directly take part in the development of the country should be somewhat limited and kept to an appropriate level per year. Pakistan also very desperately needs to diversify its reserves into a basket of currencies which should include the rising Euro and the British Pound amongst other rising currencies such as the Thai Baht, Turkish Lira and Brazilian Real. Warren Buffet the world’s most famous investor has also been reported to have invested a substantial amount of money in rising currencies such as the Brazilian Real away from the traditional stocks. It is about time Pakistan took the diversification of reserves seriously and pegged the Pakistani rupee to a more stable euro than a vulnerable dollar.

Saad Sarwar Muhammad has a BS in Computer Science from the University of Central Oklahoma, USA and an MBA (Finance) from the Indiana University of Pennsylvania, USA. He writes on issues related to the world economy with special emphasis on Pakistan, US and China. Other areas of interest include information technology, politics and religion. He is currently working as an Assistant Professor in Information Technology and E-commerce as a Cluster Head at NUST Business School(NBS), Rawalpindi, Pakistan.