Deputy Prime Minister and Foreign Minister Ishaq Dar has voiced strong opposition to the free-floating exchange rate policy, asserting that the Pakistani rupee (PKR) should be valued at Rs. 235-240 against the US dollar, based on the country’s Real Effective Exchange Rate (REER).

Speaking at a seminar organized by the Pakistan-China Institute, Dar argued that devaluing the rupee adversely affects 92 percent of the economy that does not engage in exports, exacerbating inflation and economic instability.

Dar dismissed the notion that currency depreciation enhances exports, citing Pakistan’s lack of exportable surplus. He highlighted the disparity between Pakistan’s Consumer Price Index (CPI)-based inflation rate of 6.9 percent and the policy rate of 17.5 percent, suggesting that the upcoming Monetary Policy Committee (MPC) meeting could address this gap, as current levels lack justification.

Reaffirming his belief that Pakistan would not default, Dar pointed out that the country’s debt-to-GDP ratio remains lower than those of the US, UK, and Japan. Addressing economists at the seminar, including Dr. Ishrat Hussain, a proponent of the free-float approach, Dar reiterated his preference for a stable exchange rate.

He argued that depreciation has only intensified inflation in recent years and recommended that Pakistan consider China’s economic strategies as a model for development and stability.