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Dollar rate increases by Rs4.55 in less than a month

FOOLS_NIGHTMARE

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Rate stood at Rs165.50 in the interbank
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A hike of Rs4.55 in the ongoing month of July in dollar rate moved the greenback up to a 40-month high. The last time dollar was at this level was on October 16 last year.

The dollar rate stood at Rs162.50 on Friday in the interbank. Experts say the increase in terrorist activities in the country and the reduction in the dollar supply after the expiry of the government’s amnesty scheme for the construction sector at the end of June were few reasons for the hike.

“The influx of dollars in the country reduced as the amnesty scheme expired in June,” said Malik Bostan, the chairperson of the Forex Association of Pakistan.

He said that the amnesty scheme for the construction helped people whiten their money hidden at home or stashed abroad in foreign banks.

According to the Securities and Exchange Commission of Pakistan, the construction and real estate sectors took the lead with the incorporation of 474 business ventures. The government has been focused on these sectors and wants to stir economic growth through it. The increase in construction activity has boosted cement sales to a historic high.

Bostan further said that the increase in terrorist activities such as the attack on a bus carrying Chinese engineers and also the kidnapping of the Afghan ambassador’s daughter had a negative impact on investment. “Such bad news turns away foreign direct investments,” he said.

He added that the increase in import payments especially for food items and machinery were pushing the dollar rate.

Bostan added that importers were also opening Letter of Credit with the banks prematurely fearing lockdown amid rising coronavirus cases. “That’s increasing demand for the dollar,” he said.

Meanwhile, Zafar Paracha, the Exchange Companies of Pakistan secretary, said that the government may have reached an agreement with the IMF to devalue the Pakistani currency.

He remarked that with the increase in Pakistan’s exports, remittances, and foreign exchange reserves in the last financial year, there was no reason for the rupee to depreciate. He said that current account deficit during the last financial year was not that big to affect the dollar rate.

Zafar Paracha said that if the government has reached an agreement to meet the conditions of the IMF, the value of the dollar could reach Rs165.

It should be noted that the value of the dollar in August 2020 was at the highest level of 168.87.

 

Patriot forever

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Rate stood at Rs165.50 in the interbank
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A hike of Rs4.55 in the ongoing month of July in dollar rate moved the greenback up to a 40-month high. The last time dollar was at this level was on October 16 last year.

The dollar rate stood at Rs162.50 on Friday in the interbank. Experts say the increase in terrorist activities in the country and the reduction in the dollar supply after the expiry of the government’s amnesty scheme for the construction sector at the end of June were few reasons for the hike.

“The influx of dollars in the country reduced as the amnesty scheme expired in June,” said Malik Bostan, the chairperson of the Forex Association of Pakistan.

He said that the amnesty scheme for the construction helped people whiten their money hidden at home or stashed abroad in foreign banks.

According to the Securities and Exchange Commission of Pakistan, the construction and real estate sectors took the lead with the incorporation of 474 business ventures. The government has been focused on these sectors and wants to stir economic growth through it. The increase in construction activity has boosted cement sales to a historic high.

Bostan further said that the increase in terrorist activities such as the attack on a bus carrying Chinese engineers and also the kidnapping of the Afghan ambassador’s daughter had a negative impact on investment. “Such bad news turns away foreign direct investments,” he said.

He added that the increase in import payments especially for food items and machinery were pushing the dollar rate.

Bostan added that importers were also opening Letter of Credit with the banks prematurely fearing lockdown amid rising coronavirus cases. “That’s increasing demand for the dollar,” he said.

Meanwhile, Zafar Paracha, the Exchange Companies of Pakistan secretary, said that the government may have reached an agreement with the IMF to devalue the Pakistani currency.

He remarked that with the increase in Pakistan’s exports, remittances, and foreign exchange reserves in the last financial year, there was no reason for the rupee to depreciate. He said that current account deficit during the last financial year was not that big to affect the dollar rate.

Zafar Paracha said that if the government has reached an agreement to meet the conditions of the IMF, the value of the dollar could reach Rs165.

It should be noted that the value of the dollar in August 2020 was at the highest level of 168.87.

It is okay, will support exports and curb imports. If we fix dollar to rupee or start subsidizing it CAD will ballon to double figure.

Its a repeat of what happened last year when dollar reached 168 but our current account was doing exceptional. As i said previously instead of letting rupee appreciate that much SBP should have aggressively bought dollar ( SBP was buying dollars but it could have bought a lot more if rupee was kept in the range of 158-160).

Besides if the IMF package is resumed dollar will stabilize, same thing we are witnessing now when IMF program was paused during corona (dollar reached 168). But our exports (both goods and services) , remittances grew due to market based rupee.
 

ACE OF HEARTS

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This is really bad.
It should not go above 155.
This volatility is causing harm
One of the reasons for inflation

Market based USD Rate is a black hole where extreme swings causes more harm and means the capitalist private sector determines the USD rate, specially if a foreign power wants to destabilize your economy instead SBP should take control ASAP.

Duties / Taxes need to be reintroduced / doubled for luxury goods / unimportant items / Import

Localization / Indigenization should be incentivised / given priority / Tax breaks given

Blanket Amnesty Scheme should be introduced for everyone instead of limiting it to the construction sector.
 

FOOLS_NIGHTMARE

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One of the reasons for inflation
The higher the exchange rate, the higher the fuel prices, then higher the Utility prices, and then higher the food prices and then in the end more misery for the poor. It's a DOMINO effect. I am really sorry for my friends, I simply don't agree with this mantra.
 

RealNapster

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I have no technical backing for this but I think Dollar should be 140 PKR. Anything above that is dangerous for GDP (as GDP shrink in dollar terms) and anything below this will decrease competitiveness of our exports in international market.

This is possible if we somehow take all exports (goods and services) to $40 billion, this year it was $31+ billion.
 

hydrabadi_arab

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I have no technical backing for this but I think Dollar should be 140 PKR. Anything above that is dangerous for GDP (as GDP shrink in dollar terms) and anything below this will decrease competitiveness of our exports in international market.

This is possible if we somehow take all exports (goods and services) to $40 billion, this year it was $31+ billion.
We shouldnt look at GDP through $$, this is short term thinking. To encourage industrialization we should never again fix dollar.

Pakistanis have obsession with dollar rate but have no idea about GDP growth or lack of it. They also cannot tell why we end up with IMF every 5 years.
 

Zibago

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I have no technical backing for this but I think Dollar should be 140 PKR. Anything above that is dangerous for GDP (as GDP shrink in dollar terms) and anything below this will decrease competitiveness of our exports in international market.

This is possible if we somehow take all exports (goods and services) to $40 billion, this year it was $31+ billion.
I dont think the state should intervene in exchange rate
Let market decide its prices the focus of government should be facilitating industries that export

Turkey , Lebanon ruined their economies by trying to make their currency stronger
 

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