No Devaluation Of Currency: Pakistan Decision

Greymouth Evening Star, 22 September 1949, Page 6

No Devaluation Of Currency: Pakistan Decision

LONDON, September 21.—Pakistan has decided not to devalue its currency. The Dominion is thus the only Commonwealth nation not to devalue in conformity with the devaluation of sterling. “Pakistan’s decision not to devalue the rupee in relation to the dollar is in conflict with India’s devaluation step, and is a blow to the last vestiges of economic unity oh the Indian Continent,” says the Daily Telegraph. “Pakistan will, in effect, leave the sterling area, and India’s currency will stay ‘soft.’ “Hitherto, the two rupees of India and Pakistan have remained linked, to the convenience of all concerned with international trade in South-east Asia. “On a short-term view, Pakistan has much to gain by maintaining the dollar value of her rupee. In a normal year, she can expect to export wheat and cotton. She is buying big amounts of capital goods from the dollar area, and wishes to avoid paying more rupees for them. “There are dangers in Pakistan’s course. It would not be to her advantage if the balance of her trade with India were upset. Many industries would be disabled, notably the jute industry, for if India has to pay more rupees for raw jute from Pakistan, the whole industry might lose its world market.” According to Reuter, banking circles in Bombay expressed the opinion that Pakistan’s decision not fo devalue her currency was unlikely to be satisfactory as a long-term policy. They forecast the breakdown of the present Pakistan rupee before the end of the current jute season in January or February, if not earlier. Ceylon might entirely prohibit private imports from the dollar area, I said the Minister of Finance (Mr J. R. I Jayawardene), in the Ceylonese Par- i iiament today. He added that, al-| though the prices of imports from the I dollar area would be increased, the Government was not unduly worried, since dollar expenditure could be controlled by existing legislation. An amendment to the Ceylon currency ordinance which, in effect, severs the link binding Ceylon’s rupee to the Indian rupee, was passed by both Houses of Parliament today.