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Pakistani rupee depreciated by 30.5% under PTI govt: report

FOOLS_NIGHTMARE

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  • Rupee has witnessed massive depreciation from Rs123 against the US dollar in August 2018 to Rs177 in December 2021.
  • The only other higher devaluation occurred when Dhaka fell when Pakistan’s currency was devalued by 58%.
  • Experts say massive devaluation of currency under the PTI government fueled inflationary pressures.
ISLAMABAD: The Pakistani rupee's value against the US dollar has fallen by 30.5% during the incumbent PTI-led government's tenure, as per a report in The News.

The rupee witnessed massive depreciation from Rs123 against the US dollar in August 2018 to Rs177 against the US dollar in December 2021, over the last 40 months. This makes it one of the highest devaluations of the currency in the country’s history.

The only other higher devaluation occurred when Dhaka fell and Pakistan’s currency was devalued by 58% from Rs4.60 to Rs11.10 against the US dollar in 1971-72.

Many independent economists argue that this recent devaluation of the currency was dictated by the IMF through prior actions and it has nothing to do with macroeconomic fundamentals.

Dr Ashfaque Hassan Khan, a former economic adviser, said that there was a complete breakdown of economic policymaking as the country’s fiscal policy had become subservient to monetary and exchange rate policies. He said that the monetary tightening and exchange rate depreciation resulted in higher inflation, public debt and debt servicing. The empirical evidence showed that the 1% monetary tightening hiked the inflationary pressure by 1.3% in Pakistan's case.

Experts say this massive devaluation of currency under the PTI government fueled inflationary pressures, adding that two major factors contributed to the price hike. First, the prices of food and commodities, as well as fuel prices, skyrocketed in the international market, and second, the depreciation of the exchange rate by 30.5% also led to higher inflation.

Some studies conducted by economists suggest that 10% devaluation of the currency raised the Consumer Price Index (CPI)-based inflation by 0.6%. As a result, the 30.5% depreciation resulted in increasing inflationary pressures by approximately 2%. This indicates that from the inflation standing at 11.5% on a monthly basis, nearly 2% comes through depreciation of the exchange rate.

An analysis of regional currencies versus the US dollar shows that the Pakistani currency experienced massive depreciation compared to others.

The Indian rupee stood at 75.39 against a US dollar. The Indian rupee stood at Rs70.09 against the US dollar in 2018, Rs73.66 in December 2019, Rs74.53 in March 2020 and Rs74.57 in April 2021.

In the case of Bangladesh, the Bangladeshi Taka stood at 85.76 against the US dollar and it hovered around 84 to 85.9 on average over the last two years.

Meanwhile, the Pakistani rupee continued to fall in value and stood at Rs177 against a US dollar in December 2021. It depreciated sharply from Rs123 against to Rs177 against a dollar over the last three years and four months.

Rupee and Instability
During the Musharraf-Shaukat Aziz regime between 1999 and 2007, the country’s currency remained largely stable and hovered around Rs60 against a US dollar. When the PPP-led regime came to power in 2008, the rupee depreciated as a result of a rising current account deficit and slid to Rs80 just in a few months.

Then, the rupee further adjusted against the dollar in a gradual manner after Pakistan joined the IMF program and remained around Rs90 against the US dollar from 2008 to 2013. In June 2013, the currency stood at Rs98.5 against the US dollar.

Then, the PMLN came to power in 2013. In November 2013, the Pakistani currency stood at Rs107.5 against the US dollar. Former finance minister Ishaq Dar’s policies brought the rupee down to an average rate of Rs98 against the US dollar in June 2014.

The Pakistani rupee remained stable at Rs100 in August 2014 while it adjusted slightly and settled at Rs105 against the US dollar in 2015-16 and 2016-17. Then, former finance minister Miftah Ismail allowed adjustment of the rupee against the dollar and it nosedived to Rs118 against US dollar in June 2018.

The rupee continued to slide during the interim rule of a caretaker government. However, when the PTI-led regime joined the government in August 2018, the rupee stood at Rs123 against the US dollar.

Then, Pakistan joined the IMF programmer and the rupee on average further depreciated and stood at Rs155 against the US dollar in June 2019. Till April 2020, the rupee continued to depreciate to Rs164 against the US dollar. In August 2020, the rupee touched Rs167.7 against the US dollar.

For a brief period, till April 2021, the rupee strengthened and remained on average at Rs152 against the US dollar. Since April 2021, however, the Pakistani currency witnessed a fresh wave of depreciation as the rupee on average touched Rs156 against the US dollar in June 2021, Rs168 in September 2021 and Rs170 in November 2021. In December 2021, the rupee crossed Rs177 against US dollar.

Inflation
On average, the CPI-based inflation has hovered around 8.2% between 1991 and 2020-21. However, now the CPI-based inflation has crossed double-digits and touched 11.53% in November 2021. There are other factors fueling higher inflation but the massive devaluation of the rupee also played a key role in the surge in prices over the past few months.

Economist Dr Zafar Mahmood said that the increased foreign exchange reserves help countries to maneuver, but with limited reserves, there is less room a country to stabilise its currency. Pakistan needs to build up its foreign currency reserves with non-debt-creating inflows such as exports, remittances, and foreign investments.

Sajid Amin Javed, an economist from SDPI, said that the depreciation of the currency over the last three years had actually accumulated in the last eight years because the value of the rupee was artificially raised.

He said if data of the past decade was analysed, it would show that India and Bangladesh had allowed depreciation when it was required. If data from 2016 to 2018 was analysed, it would show that Pakistan’s current account deficit worsened but the rupee remained stable; while in India there was a lesser current account deficit but the Indian rupee depreciated from Rs63 to Rs71 against the US dollar.

He said Pakistan kept its rupee on the higher side and so accumulated depreciation occurred. He termed this phenomenon as “forced depreciation” as the foreign currency reserves depleted and the current account deficit widened. He said the events in Afghanistan also added pressure on Pakistan’s exchange rate.

Pakistan, he said, joined the IMF programme so it was left with no other option but to ensure implementation on the forced depreciation. “The main problem lies with our policies as it also triggers panic and uncertainty,” he added.

 

AZ1

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In 2011 dollar was 84 then pmln came and dollar went to 123 even gone to 127 in 2018 april and had and bankrupt with no increase lf export, remittance than ppp. so where were you.
 

SQ8

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In 2011 dollar was 84 then pmln came and dollar went to 123 even gone to 127 in 2018 april and had and bankrupt with no increase lf export, remittance than ppp. so where were you.
Started with PPP - they cut Pakistan to the bone and then PML(N) went into borrowing mode so they could add meat to carve meat.
 

SQ8

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exports reached 30 billion- ish during 2013 (so PPP policies) from that point on our exports decreased
I think it was a mix of momentum from economic recovery post 2008 crash and some liberalization of policies under - ‘shocking’ Tareen to Hafeez shiekh
 

Arsalan345

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Where are all the supporters of PTI? In a recent post, they were talking about positivity. Where are they hiding now? 123 to 175? terrible. Anyone who criticizes Government becomes patwari for them.
 

Super Falcon

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I dont understand after all this disasterous situation pak weapons r useless we are cornered ecnomically and ik is enemy of country establishment is not understanding
Started with PPP - they cut Pakistan to the bone and then PML(N) went into borrowing mode so they could add meat to carve meat.
Imran doing worst
 

AZ1

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Where are all the supporters of PTI? In a recent post, they were talking about positivity. Where are they hiding now? 123 to 175? terrible. Anyone who criticizes Government becomes patwari for them.
pti can also maintain $ to 123. I still remeber in 2017 all were saying dollar should be 150 or so but pmln burn reserves and keep taking loan and in the end alarming situation.
I dont understand after all this disasterous situation pak weapons r useless we are cornered ecnomically and ik is enemy of country establishment is not understanding

Imran doing worst
because not everyone as bughz clever as you.
 

jupiter2007

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Repost:

Pakistani awam (public) doesn’t understand that when currency is devalued, it causes inflation and prices goes up.

PMLN Government spent $7 billion dollars to keep rupee overvalued against the U.S dollar to win the election, some of the money borrowed from local banks. When PTI came in power they allowed rupees to free float due to IMF conditions which resulted in devaluation of Rupees and high inflation. Even if it was NOT IMF demand, Pakistan didn’t have money to keep rupees high against the dollars. Unlike PPP and PMLN government, PTI is not borrowing any money from state bank. What does that mean? It means PTI government is not printing additional rupees.
Public need to understand that when a country is close to defaulting on it's loans and have a failed/Crushing economy (or non-sustainable economy), it takes decades, not months or years to stabilize the economy.

Inflation will eventually go down when economic situation improves and in order to achieve that government will need multi-prong strategy to stabilize the economy and turn it into a sustainable economy. I think PTI has handled things very well against all odds. Glabal economy is impacted by COVID-19 and inflation is high on many western countries.

If PTI continue to make proper changes, hopefully by the end of 2022, we will see some improvement in Pakistani economy, unles new virus impact global economy.



1. First-ever NSC [National Safety Council] meeting on public health

2. NCOC [National Command and Operation Centre] formed to serve as nerve centre

3. Rs1.2 trillion COVID-19 relief package: Rs180 billion disbursed through Ehsaas Emergency Cash, multiple other economic stimulus measures

4. Smart lockdown

5. Construction industry package to ensure employment for daily-wagers

7. Response acknowledged by the WHO [World Health Organisation] as one of the best

Welfare state/ Riyasat-e-Madina

1. Ehsaas Kafaalat, - One Woman One Account (7 million families to benefit) -

Special Persons (2 million families to benefit)

2. Ehsaas Amdan Programme

3. Ehsaas Undergraduate Scholarships distribution

4. Ehsaas Nashonuma to fight stunted growth

5. Rs180 billion disbursed during COVID-19 among 15 million families transparently

Health
1. Sehat Sahulat Card (Rs10 lakh per year health coverage for every family, can be availed at both public and private hospitals) for entire Punjab (end of year 2021), entire Khyber-Pakhtunkhwa including ex-FATA [Federally Administered Tribal Areas] merged districts (end of Jan 2021), entire AJK & GB [Azad Jammu & Kashmir and Gilgit-Baltistan]. Also for police, lawyers, transgender, etc.

2. Indigenous production of medical equipment including ventilators and cardiac stents launched

3. Isolation Hospital and Infectious Treatment Centre (IHITC) inaugurated in Islamabad

4. Lady Reading Hospital Peshawar - Medical, Surgical and Allied Services Block inaugurated

5. DHQ [District Headquarters Hospital] Hafizabad groundbreaking

6. DHQ Chakwal groundbreaking

7. 250-bed Peshawar Institute of Cardiology inaugurated

Education
1. Single National Curriculum finalised

2. University of Hafizabad groundbreaking

3. University of Chakwal groundbreaking

4. Pak-Austria Facchochschule Institute inaugurated in Haripur

5. Namal Knowledge City Phase-1 groundbreaking

6. Sialkot University of Applied Engineering and Technology groundbreaking

7. NSC to be completely, rolled out by 2023.

Climate
1. Largest forest of Pakistan in Kundian, Mianwali launched with 250 million trees target

2. Green Stimulus Package to provide employment and combat climate change as well

3. Monsoon Tree Plantation campaign

3. Largest tree plantation drive in Pakistan’s history - 3.5 million trees planted on August 9

4. Billion Tree Honey Initiative

5. Protected Areas Initiative

6. Clean Green Index awards

7. Travel Responsibly for Eco-tourism in KP (TREK) Initiative launched

8. Locust crisis tackled successfully

9. UN Biodiversity Summit, Austrian World Summit & Climate Ambition Summit addressed by PM Imran Khan

Development projects
1. Naya Pakistan Housing 20,000 housing units worth Rs100bln inaugurated by PM Imran Khan

2. Allama Iqbal Industrial City Faisalabad groundbreaking

3. BRT inauguration

4. Karachi Transformation Plan - Karachi Package

5. Ravi Urban Development Project

6. 5 decades after Mangla and Tarbela, construction for 2 large dams, Diamer-Basha and Mohmand, is well underway

7. Azad Pattan and Kohala Hydropower Projects

8. Mohmand - Sheikh Zayed Road inaugurated

9. Special Economic Zones initiated under CPEC

10. Quaid-e-Azam Business Park Sheikhupura

11. Balochistan & Sindh High Speed Broadband Project

12. Chakwal Northern Bypass

Economy
Current Account Balance (Jul-Nov)

$1.6 billion Surplus (FY21)

$7.2 billion Deficit (FY18)

Remittances (Jul-Nov)

$11.8 billion 27%

Exports (Jul-Dec)

$12.1 billion 5%

Large Scale Manufacturing (July-Oct) 6.7%

Foreign Exchange Reserves crossed $13 billion, highest since February 2018

Textile industry operating at full capacity, 80,000 power-looms opened (50,000 old re-opened, 30,000 new ones). Cement industry operating at full capacity, witnessing record orders. Vehicle, motorbikes, rickshaw sales rising. Tax revenue rising. Energy Relief Package for industries to encourage exports for sustainable economic growth.

Foreign policy
1. Qatar visit by PM

2. Malaysia visit by PM

3. UN Secretary General Antonio Guterres visit to Pak

4. UNGA President Volkan Bozkir visit to Pak

5. PM Imran Khan’s maiden visit to Kabul

6. Continued role in Afghan Peace Process, Gulbuddin Hekmatyar visit to Pak, Taliban Political Commission visit to Pak, Abdullah Abdullah visit to Pak

9. UNGA address by PM & multiple sidelines events on Climate, Money Laundering and COVID

10. Pakistan’s re-election to UNHRC

Kashmir
1. Feb 5 - Kashmir Solidarity Day

2. Jul 13 - Kashmir Martyrs Day

3. Aug 5 - Kashmir Youm-e-Istehsaal

4. Oct 27 - Kashmir Black Day

5. Kashmir Legislative Assembly Addressed by PM Imran Khan twice

Other notable developments

1. Legislation against money laundering, terrorism and sex crimes.

2. PM Imran Khan’s Policy Announcement to conduct Senate Elections through open ballot and next General Elections via e-voting.

3. PM Imran Khan announcement of provisional provincial status for Gilgit-Baltistan

PM Imran Khan’s New Year Resolutions/ Targets for 2021
1. Universal health coverage for all citizens through Sehat Sahulat Programme

2. No Pakistani should go to bed hungry (Koi Pakistani bhooka na soye); New project to be launched soon under Ehsaas Program.
 
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Sainthood 101

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I think it was a mix of momentum from economic recovery post 2008 crash and some liberalization of policies under - ‘shocking’ Tareen to Hafeez shiekh
Hafeez got us to 4.0% growth in a pandemic without too much pain (like rn- growth is hurting us) , always rescues us from default (go to man in that situation)
Isn't really the worst FM out there - but I guess he believes in financial discipline which for political gov is sometimes a no no and everyone in the country seems to hate the guy, especially the media
 

Clutch

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Where are all the supporters of PTI? In a recent post, they were talking about positivity. Where are they hiding now? 123 to 175? terrible. Anyone who criticizes Government becomes patwari for them.

I am a PTI supporter and even sent money during the election drive.... I will still vote for them.

I think the government has mishandled the economy big time. I wanted more done under CPEC and export incentives.

Unfortunately, this whole Parliamentary and the Courts are corrupt and inefficient.

I will support Imran Khan to turn this whole system into a presidential system.

The Pakistani nation is far too entrenched in corruption, immorality, ignorance, and lazy to be saved by Imran Khan alone.
 

Arsalan345

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I am a PTI supporter and even sent money during the election drive.... I will still vote for them.

I think the government has mishandled the economy big time. I wanted more done under CPEC and export incentives.

Unfortunately, this whole Parliamentary and the Courts are corrupt and inefficient.

I will support Imran Khan to turn this whole system into a presidential system.

The Pakistani nation is far too entrenched in corruption, immorality, ignorance, and lazy to be saved by Imran Khan alone.
I am with you but i want change as well. Imran khan must change ministers or probably another new system with Imran khan can change things. All i want is peaceful and terror free Pakistan. enough bloodshed and enough corruption.
 

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