What's new

Govt in anxiety over rupee’s slide

maithil

SENIOR MEMBER
May 21, 2010
3,296
-80
2,010
Country
India
Location
India
Pakistan’s bigwigs have failed to craft an effective strategy to stop the free fall of the local currency, as policy discussions have so far remained focused on better management of borders and trade related payments.

According to official documents and background discussions with people involved in the process, Prime Minister (PM) Shehbaz Sharif has taken numerous meetings in recent days and also set up a committee under the chairmanship of Finance Minister Miftah Ismail “to stabilise foreign currency markets”.

Despite taking input from the intelligence agencies, however, the authorities have failed to arrest the free fall of the currency. Continuing with the downtrend, the rupee on Monday closed at Rs237.91 to a dollar in the interbank. The rate in the open market was far above, trading around Rs244 to Rs246 to a dollar.

The constant downfall of the local currency has also eroded the gain of reduction in crude oil prices and people are forced to pay the highest rates in the country’s history.

Last Monday, the PM Shehbaz had set up a committee to review the dwindling currency situation. The committee met the next day and finalised its interim recommendations for the PM.

The decisions taken in these meetings, however, were largely related to strengthening the existing operational mechanisms. The meeting also decided that the Federal Board of Revenue (FBR) will issue a fresh notification mandating international passengers to declare their foreign currency, in addition to improving its system for real-time reporting of currency flows.

Outbound international passengers will have to declare their currency only if it is $5,000 or more, and inbound air travellers will make a declaration in case they hold $10,000 or more. The notification, which is expected soon, will end the uncertainty for international passengers.

At present, air travellers are required to make a foreign currency declaration, irrespective of the amount.

sources said that some of the new measures that the government has started adopting may bring marginal improvement in the situation. The government was still not fully realising the gravity of the situation, which requires drastic enforcement steps against hoarders, including bankers, and making accurate forecasts of currency demand and supply.



To stabilise the foreign currency markets, the PM constituted a committee on foreign exchange. Besides the Minister for Finance as its chairman, the adviser to PM on Establishment MNA Ali Pervez Malik, Governor SBP, Secretary Finance, Chairman FBR, Director General of Intelligence Bureau and representatives of the Director General ISI and the MI were included as members.

committee has been mandated to suggest measures to curb manipulation in foreign currency markets, propose steps to address market imperfections and unregulated illegal practices, including hawala and hundi trade, and smuggling of foreign currency.

The committee was also asked to recommend a strategy to discourage hoarding of foreign currency for speculative purposes and prevent misuse of debit and credit cards for outward remittance of foreign currency.

The sources maintained that the committee discussed these issues and submitted its findings to the PM last week.

In light of these recommendations, it has been decided that the FBR and the SBP will take measures to discourage over-invoicing by importers that is resulting in more than the required outflow of the foreign currency. The FBR and SBP will also take measures to ensure better monitoring of the borders, including depositing export proceeds from Afghanistan in a timely manner.

Accordingly, the FBR has been directed to streamline its currency declaration regime, which at one hand will reduce the hardships being faced by the commuters, and on the other will provide real time information about the inward and outward movement of currency through airports.

It has also been decided that the FBR will launch an application that will allow outbound passenger to make advance declarations without any hassle.

However, some of the participants of the meeting were of the view that these small steps would not help to soothe the nerves of the markets, as the government needs to make bold steps to address the situation. They said the central bank and government were not willing to crackdown on bankers, who have made billions betting on the rupee.

Similarly, the government’s targets for the exports, imports and current account deficits were also unrealistic and need to be revised to bring some realism in the numbers and then it could plan the inflows and outflows accordingly.

 

ziaulislam

ELITE MEMBER
Apr 22, 2010
20,197
9
21,359
Country
Pakistan
Location
United States
Put a ban on imports except fuel, food and medicine for a few months.
Wont acheive anything
This will just kill the economy further and make life of already billionaire tax officers a trillion air since more smuggling and more pocketing of money.

Even today you can go to any market and buy a smuggled items

unless people choose to change their mind and think corruption as bad the country wont progress.

currently pakistanis believe corruption is good for them since they will have chance to do corruptoon(apna time be aye ga)
..

this includes me..its good..keep the work going and continue to vote for nawaz sharif and bhutto
.
 
Apr 19, 2022
569
-2
649
Country
India
Location
India
Wont acheive anything
This will just kill the economy further and make life of already billionaire tax officers a trillion air since more smuggling and more pocketing of money.

Even today you can go to any market and buy a smuggled items

unless people choose to change their mind and think corruption as bad the country wont progress.

currently pakistanis believe corruption is good for them since they will have chance to do corruptoon(apna time be aye ga)
..

this includes me..its good..keep the work going and continue to vote for nawaz sharif and bhutto
.
The other option is to actually deregulate Fuel and Currency fully.

It will be a huge shock but for a very short time period. The chances of stability are higher after that.

But deregulation is a political suicide.

Pakistan needs a military backed technocratic govt to take a couple of hard decisions.
 

Enigma SIG

SENIOR MEMBER
Feb 20, 2009
7,553
-5
11,190
Country
Pakistan
Location
Pakistan
Pakistan needs a military backed technocratic govt to take a couple of hard decisions.
That's just suicide but with extra steps.

Wont acheive anything
This will just kill the economy further and make life of already billionaire tax officers a trillion air since more smuggling and more pocketing of money.

Even today you can go to any market and buy a smuggled items

unless people choose to change their mind and think corruption as bad the country wont progress.

currently pakistanis believe corruption is good for them since they will have chance to do corruptoon(apna time be aye ga)
..

this includes me..its good..keep the work going and continue to vote for nawaz sharif and bhutto
.
Yup, sentiment across the country is like fack it; maal banao bas, mulk di @(*$!(!()#*)!(%
 

Nothing

FULL MEMBER
Jul 2, 2010
1,185
0
674
Country
India
Location
United States
Currency fall is due to current situation plus GOP's non-existence capability to take any good decisions. I am wondering when there is flood raging across nation - both top leaders of ruling parties are outside country. Plus PM is showing his incapability by ruining to London to ask even for bathroom breaks. Dude we are living in 21st centuries , we are launching satellites and big deep water oil rigs remotely, can't you consult your brother in London over video call or address SCO over video conference and send your FM there. anyway he is useless in Pakistan. GOP needs to get act together. Stay in country , start big international media campaign , show how foreign money is helping victims of flood show them impact of their money- people will come and donate more. In my company we are raising money for flood victim - but it is being one-way channel. Good folks here are trying to help as much as they can. PM should pick up phone and start calling any one who is donating more than USD 10K or certain amount.
Depreciating currency is symptom of much bigger issues than just depleting foreign reserves or tanking GDP growth. I fear GOP is weaking Pakistan not just economically but by eroding its soft power. This will impact PKR eventually
 

ziaulislam

ELITE MEMBER
Apr 22, 2010
20,197
9
21,359
Country
Pakistan
Location
United States
The other option is to actually deregulate Fuel and Currency fully.

It will be a huge shock but for a very short time period. The chances of stability are higher after that.

But deregulation is a political suicide.

Pakistan needs a military backed technocratic govt to take a couple of hard decisions.
We already have a military backed govt since 1947
 

Wood

SENIOR MEMBER
Mar 30, 2013
4,840
-10
4,056
Country
India
Location
Canada
Even after IMF Bailout ?

Fundamentally Pakistani economy is broken.
Floods are to blame. Massive loss in production will fuel speculators frenzy to tank PKR. I think the Rupee may slowly recover after the flood waters recede.
 

maithil

SENIOR MEMBER
May 21, 2010
3,296
-80
2,010
Country
India
Location
India
PM going on useless foreign visits every day is such bad optics for a country half under water. Shows to world that the government itself is not serious about Pakistan. Why should a country in desperate need of dollars send so many ministers to one world city after another ... ?
 

lightoftruth

BANNED
Mar 10, 2012
4,237
-51
4,812
Country
India
Location
India
Floods are to blame. Massive loss in production will fuel speculators frenzy to tank PKR. I think the Rupee may slowly recover after the flood waters recede.
Flood impact do not happen this fast at macroeconomic levels.

More to do with unending fiscal blunders.

PKR crossed 240
 

HAIDER

ELITE MEMBER
May 21, 2006
30,104
11
31,251
Country
Pakistan
Location
United States
1663734085910.png

1663734117101.png
 

epebble

FULL MEMBER
Sep 21, 2022
1,776
0
1,165
Country
United States
Location
United States
At this point, it may be a good idea to Dollarize the economy instead of having steady depreciation that has already created a loss of trust in PKR.
 

Users Who Are Viewing This Thread (Total: 1, Members: 0, Guests: 1)


Top Bottom