• Monday, November 18, 2019

Currency dealers sell $2.4bn to banks

Discussion in 'Pakistan Economy' started by Kabira, Nov 10, 2019.

  1. Kabira

    Kabira ELITE MEMBER

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    KARACHI: The open market currency dealers said they have sold $2.4 billion to the banks in last twelve months while increase in inflows is likely to surpass the selling target of $3.5bn for the ongoing fiscal year.

    They said that since September last year, they sold $1bn more to banks increasing the total to $1.4bn.

    Amid slow and gradual appreciation of the rupee against dollar, currency traders believe the exchange rate may see big change once the country comes out of grey list in next review of the Financial Action Task Force (FATF).

    The local currency gained about Rs80 paisa in a month against dollar which was being sold as low as Rs155.20 on Saturday in the open market. In the inter-bank, the dollar was being sold at Rs155.40 on Friday – last day of the week.

    Bankers said the gradual declines in dollar are mainly on account of falling demand for the greenback from importers. “The inflow of dollars has increased while outflow is low which is visible in the large decline of current account deficit,” said a banker.

    The open market, which follows inter-bank rates, witnessed 95 per cent fall in dollar buying.

    “The buyers have almost disappeared due to many reasons but mostly on account of tight monitoring of the foreign currency buyers,” said Forex Association of Pakistan President Malik Bostan.


    He said the investment in greenback lost attraction particularly due to high interest rates which have pulled the local currency deposits.

    “There are only sellers in the currency market. I believe once the country comes out from the grey list, the selling would be much higher as many people still hold dollars due to looming FATF decision, Kashmir issue and the recent political sit-in at Islamabad,” said Bostan.

    The open market is currently selling $10 million dollars to banks every day. “We have sold $1.2bn during June to Sept,” said Bostan.

    “I believe we can sell up to $4bn to banks in FY20,” he added. The amount is significantly higher than the target of $3.5bn set by currency dealers for ongoing fiscal year.

    The current account deficit, which was about $13bn in the last fiscal year, is likely to reduce further in the current fiscal year.

    The government has vowed to bring down the deficit by about $7bn which would be landmark success since the country has been facing serious threat of default in the presence of $20bn current account deficit in FY18.

    Published in Dawn, November 10th, 2019
    https://www.dawn.com/news/1515944/currency-dealers-sell-24bn-to-banks
     
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  2. pakpride00090

    pakpride00090 FULL MEMBER

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    Khan Zindabad.
     
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  3. ziaulislam

    ziaulislam ELITE MEMBER

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    Ofcourse the rupee is at an artificial low value right now
    Its real value is somewhere between 140s but state bank is buying dollars to keep it high...

    My guess is that this strategy is basically keeping future devaluation in mind..a slow 1-2% loss is normal phenomena over years
     
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  4. VCheng

    VCheng ELITE MEMBER

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    The PKR will remain relatively stable, with only a slow and managed decline, as long as Pakistan follows its plan to meet its commitments to the IMF bailout, barring any sudden jolts such as FATF, which are unlikely. Further slips in value are likely to happen only if Pakistan request waivers that deviate from the bailout terms, such as resuming sovereign guarantees for more loans.
     
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  5. BATMAN

    BATMAN ELITE MEMBER

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    How does dealers have so much $.
    Answer is simple... Pakistan's economy is resting on remittances.
    People hand carry small amounts and sell to local market, which comes out to be billions yearly.
    Now people with common sense must ponder why than Pak currency is not strengthening, while during Musharraf rue same remittances turns the table on $ within couple of years.
     
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  6. ziaulislam

    ziaulislam ELITE MEMBER

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    currency isnt strengthing because of 8% deficit and high state bank lending, in other words govt is printing almost 2000 billion rupees of money each year that doesnt exist to begin with!!

    now PTI govt crub in spending, but than it had to make the interest rate realistic to save the rupee(i.e from 6 to 11%) this exacerbated the deficit and added another 700b to already 2000b deficit..

    so the problem isnt just high deficit but artifical low interest created in the presecene of high deficit..its like nuclear bomb..

    than forget about the money being drained in circular debt and other state institutes...

    pakistan was royally **** its miracle that it recovered...

    fact that pakistan posted no primary deficit for the first time in 10 years when the interest rates are at real place or may be even marginally higher is what surprised most people..the turn around has been fast and spectacular..even IMF states all is good..

    however, this turn around has taken a huge toll on middle class,essentially it has pushed alot into lower class and has curb their spending thus slowing the GDP growth and imports..

    all in all, this has made PTI a unpopular party, thus, the cycle of booma nd burst will continue, people will elect back the PMLN will continue with their "Darism" a.k.a printing notes,"nawazim"aa.k.a relentless govt spending to produce stimulus and "bhuttoism"a.k.a large govt employee induction in state institutions to bankrupt them..

    than when everything start falling, military would intervene to fix things and the cycle repeats....we have seen it happening since the 1970s...

    on the other hand look ta Bangladesh and Vietnamese..they have more poverty in Pakistan almost same GDP but their spending is half, the taka is at real value,..they understand than there are no shortcuts in life and than artificially propping up rupee to take people out of poverty will backfire in matters of month and wil push people more in poverty but difference is that Bangladesh and Vietnam have dictatorships..while Pakistan has rotatory democracy between nawaz and bhutto
     
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  7. Sine Nomine

    Sine Nomine ELITE MEMBER

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    PTI should simply call back PPP and PMLN era men incharge and start questioning them.They would atleast try to curb this for future,even if there is no PTI Govt.
     
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  8. ziaulislam

    ziaulislam ELITE MEMBER

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    happened in 1990s when artifical low interest and high spending led to 100% devalaution and pakistan bankrupting..what happens next 10 years later the same party is in power with same policies...

    1970s PPPP nationalized everything destroyed the country, they are back in power in 2008 and we saw them retrospectively putting 1000s of employees in PPPP and selling 12% of shares free of cost to all employees...result PIA goes under 400b debt...

    the point is till the ideas itself are popular in the country nothing will fix, today these idea are not only alive but widely popular, pakistanis think life is short and thus should be enjoyed who cares if the country goes into debt and defaults....corruption is acceptable as long as we get our share...

    what worse because these policies are widely popular you will see PTI or any new party adopting them too..
    thus you see the polcies of blanket subsidies in utility stores which hasnt worked before and doesnt make sense, why give 6 b subsidy to everyone rather thna just the poor?
     
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  9. Dark-Destroyer

    Dark-Destroyer FULL MEMBER

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    Pti needs to remain in power for atleast 10 years to fix this mess and next time come woth full majority hopefully before their term ends we will see a big impact.
     
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  10. VCheng

    VCheng ELITE MEMBER

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    Let them try to win the next election based on the results delivered at the end of this present first term first. What majority the people decide to give them by votes remains to be seen, invisible hands notwithstanding.
     
  11. Sine Nomine

    Sine Nomine ELITE MEMBER

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    PTI can simply cut everything in 4 fours,gave no Govt Jobs and allow huge relief in last year.This winning next elections.
     
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  12. AZ1

    AZ1 SENIOR MEMBER

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    I really want ppp or pmln to come back in govt again and suck the blood of this na shukri qoom. Then may be they will reliazed
     
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  13. Dark-Destroyer

    Dark-Destroyer FULL MEMBER

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    Still wont realise they are brain dead
     
  14. VCheng

    VCheng ELITE MEMBER

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    People always get the government they deserve, or so goes the old adage.
     
  15. ziaulislam

    ziaulislam ELITE MEMBER

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    Already happened 10 times...we all remember the 1990s devaluation and slow growth despite being gas/energy surplus
     
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