ICCI warns against dollarization of economy

Lahore: Islamabad Chamber of Commerce and Industry (ICCI) on Friday expressed concern over renewed interest of masses and business community in US currency which can result in dollarization of economy.

A weak rupee will force masses and the business community to trust dollar which is against the national interests, said President ICCI Atif Ikram Sheikh.

Talking to a group of traders led by Iftikhar Khan, a business leader from Malakand, he said that authorities must take steps to reverse the trend before it leaves rupee weightless.

Atif Ikram Sheikh said that tendency among masses and business community to use foreign currency in parallel to domestic currency is very dangerous which cannot be countered by statements or administrative measures.

Sometimes masses trust in dollar help commercial banks hold more US dollars than the central bank which triggers fall in rupee value, he warned.

A reasons for quick dollarization is negative rate of return given to the depositors which leave many with no option but to prefer dollars to reduce risk associated with inflation and devaluation.

This is where the SBP could have played an important role, he said, adding that situation can only be controlled by applying economic measures and encouraging use of local currency.

The government must ensure better regulations, enabling and transparent policies, mobilise resources, keep inflation, deficit and balance of payments in control and limit borrowing to boost forex reserves, he demanded.