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Tuesday, January 31, 2023
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EditorialTrade in local currency

Trade in local currency

Chinese investment in Pakistan and the expansion of mutual trade between the two countries are critical for the recovery and development of our national economy, but a major impediment has been the long-term volatility in the value of the dollar. It gives me great satisfaction that a permanent solution to this problem has been discovered. Because of the ever-changing exchange rate of the dollar, a system of exchange between the Chinese currency RMB and the Pakistani currency Rupee has been developed for the first time, allowing Chinese investors to exchange 10 million rupees without using the dollar.

A million Pakistanis will be able to save billions of dollars. The Karachi branch of the People’s Bank of China has been permitted to function as a clearing bank for both countries’ currencies for this purpose. Lia Long Tie, general manager of Hangeng Trade Company in Gwadar, told the media that the previous strategy served as a means of persuading Chinese businessmen to engage in Pakistan on a wider scale. Chinese merchants and investors had to transfer Chinese currency into US dollars and then into Pakistani rupees in the financial system. Exchange rate losses caused by volatile prices are used to deter Chinese businesspeople and investors, but the direct exchange of Chinese currency and the rupee has solved this problem, and more investors are now in Pakistan. More traders will come for investment in general, and in Gwadar, in particular. Unquestionably, such exceptional measures are required to get the national economy out of its slump. It would be preferable to follow the same process in trade with Russia, Turkey, and other nations to slow economic activity owing to the volatile value of the dollar.

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