OT very long ago, a strong currency symbolised the strength of an economy.

In pursuit of integrating national economies into international markets and weakening economic fundamentals partially because of faulty ways of going about it the market-led weakening of competitive currencies has come to be seen as a`virtuous` device to spur falling exports, ignoring its multiple impacts.

The purchasing power parity of a national unit, which tends to significantly differ from a market-driven exchange rate, is only used to measure the size of a national economy and its market for the benefit of global investors. For example, China is the second largest economy in the world, not on the basis of its market exchange rate but on the basis of the yuan`s purchasing power as compared to dollar.

However, the excessive use any device has counter-productive results. With a few exceptions, notwithstanding weakening national currencies, trade deficits are a common, enduring feature of both developed and developing economies. Though a permanent cure is not in sight, the problem istaken care of by foreign debts and other financial and capital inflows. Workers` remittances, in case of Pakistan, finance about 45pc of total imports.

Coupled with a variety of subsidies, the falling exchange rates (with no laudable outcomes) have, however, brought into question the concept of export-led growth/industrialisation in the absence of enhanced productivity, quality and competitive prices.

Currency depreciation provides a temporary boost to all kinds of low value-added goods, when only high value-added exports need to be incentivised to boost foreign exchange earnings.

That the international market is not so conducive for foreign trade has led some strategic thinkers to reach some radical conclusions `The model for exporting prosperity is certainly over` says Morgan Stanley`s chief global strategist and head of emerging markets, Ruchir Sharma, `more and more nations are trying to do more at home, rather than trade, to power domestic economies.

This may translate into the export of any trade surpluses left after meeting domestic demand in areas where a country has a domestic advantage.

With a mere current 19pc share in total exports, the food sector has a lot of room to boost foreign sales in neighbouring markets, provided farm/ orchard productivity is enhanced and food processing modernised more speedily.

Despite a weakening external sector, Pakistan`s economy is growing though the CPEC has yet to make any significant impact. To quote a leading industrialist `the globalisation-led growth is being questioned in both developed and developing countries.

Of course, it would be more meaningful if waysare found to reform globalisation rather than promoting it with an excessive dose of monetary policy so that it corresponds to the specific needs for sustained growth of different domestic economies.

For Pakistan, the incumbent government is conscious of the multi-dimensional impact of a falling rupee, particularly on debt servicing and fiscal deficit.

Despite IMF pressure and expor1ers` clamour for a `competitive` exchange rate, the rupee has remainedrelatively stable, or not lost its value as rapidly as in years, prior to PML-N coming into power.

The rationale for the current exchange rate policy was elaborated by Dr Muhammad Iqbal, FBR member for Strategic Planning, Reforms and Statistics, at a meeting recently held at the Sustainable Development Policy Institute on `Export Competitiveness and Exchange Rate Management in Pakistan.

Dr Mohammad Iqbal was reported to be of theview that depreciation in the exchange rate would create complications at multiple levels and that it would not be advisable to go for this option without a careful calculation of all corresponding factors. He pointed out that the perceived overvalued exchange rate was not the only stumbling block in way of our national exports.

The depreciating exchange rates have a very wide impact. If the value of the rupee falls, it makes imports of goods and services costlier. Dearer capital goods and industrial raw materials raise cost of production and investment and fuel inflation. Thus the `export-boosting effect of rupee depreciation is extremely short`, says an industrial tycoon in the import-substitution business.

Coupled with a weakening exchange rate of the national currency; the low prices of commodities, low value-added products and costly imports result in adverse terms of trade. Therefore developing countries like Pakistan suffer a perpetual trade deficit and balance of payments problems. Ill-thought out export policies have delivered an import-oriented economy, impacting adversely on the economic growth rate (imports have a negative contribution to the GDP).

In cases `where foreign trade acquires greater importance than economic development, the outcome is a permanent trade deficit` says the head of an industrial group. It is time to review the exchange rate policy to push economic growth and not only exports.

Whereas the need for foreign trade to boost prosperity cannot be denied, nor the need for boosting exports, new ways have to be found to access fast changing export markets.