Our overall foreign debt and import levels and twin deficit situation have been so much distressed now that Pakistan has entered into an unfortunate situation that the more economic activity increase, the higher is the stress on our Rupee and hence higher depreciation, which also leads to inflation. This is a tragic dichotomy. Best thing for improvement in our exchange rate is to just shut down our economy as it will mean lesser imports and hence lesser need for dollars.
That's why Corona pandemic came as a blessing for our Rupee parity as the resultant economic slowdown meant that we didn't have to import high levels of goods and commodities and prices of oil also tumbled. However, trade deficit was back to record levels in FY22 as economic activity revived in the country and commodity prices shot up and hence we saw severe Rupee depreciation.
One question many people wonder is how Iranian or Afghanistan's currencies are doing better than Rupee even when they are under sanctions and in shambles. Reason is the same that they are not that much import dependent than Pakistan as our annual trade deficit is just huge.
All that means that we would be better off with a 4 day work week or even lesser work days. However, the flipside is the increase in unemployment due to reduced economic activity. So we are effectively caught up between whether to go for employment generation and increasing GDP/capita or on the other hand reduce inflation and exchange rate depreciation. We can't have both.
