Increase in price of essential imports
We all know that whatever trade we do in the international market we have to pay them in dollars. And when dollar price increase, that means that same 1 dollar thing that was going to cost us 100Rs will cost us 150Rs now. When 1 dollar is equal to 100Rs petrol is 100Rs litter, when dollar increases to 150. The petrol price increases to 150 and when the petrol price increases, everything become expensive. Because transportation cost increase, electricity bill increase, and many other factors are involved. Petrol and other resources that we must buy from the international market are the main reason things get expensive. We have to pay more for the same thing.
Increases the Debt
We Know Pakistan have a huge debt to pay international. When dollar price increase by One rupee, the debt increases by 100Billion rupees. Now you do the math of how it affects the economy. When debt increases, the government have to increases taxes on different things, and that’s why things of frequent use get more expensive. It has a positive effect on some people as well. Like exporter, they earn a lot more money when dollar prices increase against Pakistani rupee. But the other thing is that their production cost rises when the dollar rises.
High investment to start a business
When rupee devalues, the businessman stops investing in the market and keep their money to themselves until its price is stable. The businessman has to purchase things to run a business. He obtains things worth of 10 lacks when 1 dollar is equal to 100 rupees. And when the dollar is equal to 150 Rupee, he has to invest 15lack rupee to buy the same stuff. That is how the economy is hurt with an increase in the dollar price. No new business means no new jobs, and with more unemployed people, the crime rate increases. When the crime rate increases government have to increase the security budget that in turns increases the taxes. The circle goes on and on, and the economy gets weaker day by day.
International investors take their investments back
No businessperson would like to invest in a country with an unstable currency. When something happens in the country like war, political instability, investors take out their money. People who get their money out at political uncertainty, how they are going to keep investing when money is unstable. That is why currency should be stable, and the dollar price should be as low as possible to survive in international markets. When a currency is unstable, even the Pakistani investors take their money to other countries. And start a business there because earning with minimum input is better than wasting money. That is why the government should focus on making the dollar stable and keeping it to the lowest rates. That would attract more investors, and new businesses will run, and the economy will grow as it is supposed to.