ISLAMABAD: Federal Board of Revenue (FBR) Chairman Rashid Mahmood Langrial has explained why the Pakistani rupee has weakened against the US dollar.
He identified inflation, limited productive capacity and global economic pressures as major factors.
In an article published in an Urdu newspaper, Langrial discussed the reasons behind the rupee’s long-term decline.
The FBR chairman said changes in the dollar rate eventually affect ordinary citizens. Many goods and production inputs in Pakistan are connected to international prices.
He explained that an exchange rate reflects the relative value of currencies. Several economic factors influence this value over time.
These factors include domestic price levels, productivity and a country’s ability to compete internationally.
According to Langrial, three main factors have contributed to the rupee’s decline. These are domestic inflation, limited production and export capacity, and external global pressures.
Discussing inflation, he said currencies can weaken when local prices increase faster than prices elsewhere.
Pakistan has experienced higher inflation than the United States over several decades. Langrial said this difference gradually reduces the purchasing power of the rupee.
The FBR chairman also highlighted Pakistan’s limited productive capacity. He said stronger production and exports can help support a country’s currency.
Economies that produce competitive goods and services for international markets can generate more foreign exchange. This can reduce pressure on their currencies.
Langrial compared Pakistan’s economic situation with Vietnam. He used the comparison to highlight differences in productive and export capacity.
He also pointed to international financial conditions and changing commodity prices. These factors are largely beyond Pakistan’s direct control.
According to Langrial, higher US interest rates can attract international investment toward dollar-based assets. This can increase demand for the US currency.
Oil prices are another important factor for Pakistan. The country imports large quantities of petroleum products.
When global oil prices rise, Pakistan needs more foreign currency to pay for energy imports. This can place additional pressure on the rupee.
Langrial said foreign exchange reserves can help Pakistan absorb external shocks. However, reserves cannot fully protect the economy from global market movements.
He argued that simply trying to control the exchange rate would not address the underlying problems.
According to the FBR chairman, lasting improvement requires action on inflation and productive capacity.
He said these are areas where domestic policies can have a direct impact. Global financial conditions and commodity prices, however, cannot be controlled by Pakistan alone.
Langrial’s comments highlight the connection between domestic economic conditions and exchange rate movements. They also point to the importance of stronger production and exports.
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The remarks come as Pakistan continues efforts to improve economic stability. Policymakers remain focused on managing inflation, strengthening exports and maintaining external stability.
