What's new

PTI Controlling Intrest Rate and Petrol Prices is much worse what PMLN did in CA.

Desprado

FULL MEMBER

New Recruit

Jun 30, 2018
85
0
83
Country
Pakistan
Location
Pakistan
thats very wrong on a lot of places. True forex is determined by the supply/demand but you use your reserve to buy back your currency in the international market to restrict and lower the supply of your currency to prevent it from devaluing. That’s the whole point of the reserve to restrict the supply of your currency if the demand falls

Interest more or less allows how much liquidity you want in your economy. 0 or negative interest means more borrowing from bank. Which means more currency is in circulation. And that borrowing can cause imports to increase should the borrow money is used to import machinery, luxury items etc etc

0 interest usually means government want more spending in the economy and want more consumption
Sir you never use reserve in market base currency that is whole purpose of it.

The sole reason to increase the reserve in Market base currency is to attract FDI, better import position, and better you get better credit line.

You are only allowed to buy Dollar from the market cannot sell it under market base currency unless their is serious crisis like we had in March 2020.
 

Mk-313

FULL MEMBER
Apr 26, 2020
716
0
285
Country
United States
Location
United States
Sir you never use reserve in market base currency that is whole purpose of it.

The sole reason to increase the reserve in Market base currency is to attract FDI, better import position, and better you get better credit line.

You are only allowed to buy Dollar from the market cannot sell it under market base currency unless their is serious crisis like we had in March 2020.
ok There is a base currency which your own country’s currency. There is no such thing as “market base currency”. And yes you can by your own Currency using the USD your central bank have

I never made the arguement that you can increase your reserve from forex. Idk where you got that from. I said the point of the reserves is to stabilize your currency thays what reserves do.

If you want your Rs. Price to be higher against the Dollar
- you export more. So your central bank gets more USD in their reserves
- your central bank buys the Rs. From the international market using those dollars
- which caused the Rs. Supply in the international market to be less and the value of your currency starts to rise

Central banks go that everyday that’s why Rs. Price change day to day

But if there is a panic in market and investor start to dump their Rs. Holding but you don’t have enough reserve to buy it back. Then the Rs. Supply goes up and your currency starts to lose value.

And if your govt doesn’t have enough reserves then market hawks starts speculative attack. Which is what happened to your currency when it’s price spiked from 100 to 160 against the dollar
 

Zibago

ELITE MEMBER
Feb 21, 2012
35,281
10
56,487
Country
Pakistan
Location
Pakistan
PTI Controlling Interest Rate and Petrol Prices is much worse what PMLN did in CA.

It is crime to control interest ,where the rate negative and it should be beyond 10. Moreover, why PTI wants to control Petrol prices where the country cannot sustain it and it lead another disaster ,which will be CAD and fuel adjustment with a missive hike.

PTI doing what is everything wrong and political motive. Desperate growth does not sustain because measure are desperate and not organic.

In my point of view, Finance matter should be handle by Army and should be taken from Polticial parties because they care about winning election. PTI or any other party is not more Important than Pakistan. Only Pakistan is important.
Fuel prices will be hiked eventually we need to stop making petrol price a political issue and raise it in accordance with international rise
 

Jungibaaz

RETIRED MOD
Jul 4, 2010
7,916
102
16,339
Country
Pakistan
Location
United Kingdom
The recent measures to issue more debt and slash interest rates are concerning from a sustainability perspective. I agree with you there OP. But PML went even further last time, and actively pegged PKR and kept it significantly overvalued.

There are slightly concerning signs from this governments very recent direction, as they are attempting to boost growth short term.
Fuel prices will be hiked eventually we need to stop making petrol price a political issue and raise it in accordance with international rise
It would be best. But governments have been talking about ending this for decades now.
 

Desprado

FULL MEMBER

New Recruit

Jun 30, 2018
85
0
83
Country
Pakistan
Location
Pakistan
ok There is a base currency which your own country’s currency. There is no such thing as “market base currency”. And yes you can by your own Currency using the USD your central bank have

I never made the arguement that you can increase your reserve from forex. Idk where you got that from. I said the point of the reserves is to stabilize your currency thays what reserves do.

If you want your Rs. Price to be higher against the Dollar
- you export more. So your central bank gets more USD in their reserves
- your central bank buys the Rs. From the international market using those dollars
- which caused the Rs. Supply in the international market to be less and the value of your currency starts to rise

Central banks go that everyday that’s why Rs. Price change day to day

But if there is a panic in market and investor start to dump their Rs. Holding but you don’t have enough reserve to buy it back. Then the Rs. Supply goes up and your currency starts to lose value.

And if your govt doesn’t have enough reserves then market hawks starts speculative attack. Which is what happened to your currency when it’s price spiked from 100 to 160 against the dollar
No difference what you saying now. People are buying dollar and selling rupee because PKR on daily bases is losing 50 to 60 paisa value. Does pressure only come for PKR and not for other countries? This the main problem of PTI government do they accept their mistake that they have botched the entire currency with no gain on external front.

Bangladesh Taka is 107% REER value
India REER value is 112%
Sri Lanka REER value is 130%


They manage debt far better than us.


What achived zero in PTI era. No economic improvement what so ever. 50 million dollar is not a major investment and this is the max investment ratio came in PTI era for industries.


The market base currency has no merit and did give single benefit to Pakistan.


What Pakistan got controlling CAD? Nothing but jokes. Currency is still very undervalued, debt increased to 116.5 billion, IMF program got paused, lenders hate PTI jokes and lies.
 

Patriot forever

FULL MEMBER
Jun 2, 2020
1,723
3
3,351
Country
Pakistan
Location
Pakistan
No difference what you saying now. People are buying dollar and selling rupee because PKR on daily bases is losing 50 to 60 paisa value. Does pressure only come for PKR and not for other countries? This the main problem of PTI government do they accept their mistake that they have botched the entire currency with no gain on external front.

Bangladesh Taka is 107% REER value
India REER value is 112%
Sri Lanka REER value is 130%


They manage debt far better than us.


What achived zero in PTI era. No economic improvement what so ever. 50 million dollar is not a major investment and this is the max investment ratio came in PTI era for industries.


The market base currency has no merit and did give single benefit to Pakistan.


What Pakistan got controlling CAD? Nothing but jokes. Currency is still very undervalued, debt increased to 116.5 billion, IMF program got paused, lenders hate PTI jokes and lies.
Bro all of your stats are wrong.

India. It is not overvalued.

1624364610582.png


I do not know about Srilanka ( they are not doing that great last i knew are cash strapped at the moment asking loans from Bangladesh).

Bangladesh REER index is fine.

Pakistan REER hit equikibrium in April around 100, in May it was 103 or 104, it is now correcting itself.


As far as external debt is concerned. Yes the figure is correct but it will be easier for you to understand the annual increase in debt.

1624366496687.png


Do keep in mind 2 points.

1) The interest payment ( not principal amount as it practically gets rolled over and does not affect net debt ) is much higher in pti 3 years as compared to plmn last 3 years.

2) Reserves are increasing for the last 3 years (Net increase of $8b i guess) whereas in last 3 years of plmn reserves were decreasing ( Net decrease of about $8.5b i think).
 

Desprado

FULL MEMBER

New Recruit

Jun 30, 2018
85
0
83
Country
Pakistan
Location
Pakistan
Bro all of your stats are wrong.

India.

View attachment 755481

I do not know about Srilanka ( they are not doing that great last i knew are cash strapped at the moment asking loans from Bangladesh).

Bangladesh REER index is fine.

Pakistan REER hit equikibrium in April around 100, in May it was 103 or 104, it is now correcting itself.


As far as external debt is concerned. Yes the figure is correct but it will be easier for you to understand the annual increase in debt.

View attachment 755500

Do keep in mind 2 points.

1) The interest payment ( not principal amount as it practically gets rolled over and does not affect net debt ) is much higher in pti 3 years as compared to plmn last 3 years.

2) Reserves are increasing for the last 3 years (Net increase of $8b i guess) whereas in last 3 years of plmn reserves were decreasing ( Net decrease of about $8.5b i think).
Reserve are negative yar. It is 7.3 billion negative due to IMF liabilities. In PMLN it was 7.6 billion negative.

This is because we prematurely are pausing IMF program and it is a condition if we compelete IMF program than only that Loan can be considered as 10-30 years installment.


Reserve are same, no improvement in anything expect remittance. In PMLN era, PSX was 110 billion dollar worth now it is even proper 50 billion dollar worth. No industrial investment like PPP and PMLN had, no major B2B business are coming, companies will never invest in country where it's currency can devalue 60 to 50 paisa against dollar everyday. Do you see any currency right now in entire region or any other country going losing around 50 paisa everyday?

Only Pakistan has problems?


BTW your REER chart of Bangladesh is of 2020. We are in 2021.
 

Patriot forever

FULL MEMBER
Jun 2, 2020
1,723
3
3,351
Country
Pakistan
Location
Pakistan
The recent measures to issue more debt and slash interest rates are concerning from a sustainability perspective. I agree with you there OP. But PML went even further last time, and actively pegged PKR and kept it significantly overvalued.

There are slightly concerning signs from this governments very recent direction, as they are attempting to boost growth short term.

It would be best. But governments have been talking about ending this for decades now.
Yes i share the same concerns.
Most likely outcome is during the course they will cut corners in PSDP and huge amount allocated in subsidies, to mitigate for any shortfall in revenue target.


Ideally petrol prices should be increased but until the end of june as gov has nearly achieved its revenue target petroleum levy will be near zero. Starring next financial year alot depends on $1.5b oil facility from saudi arabia, this will give them some flexibility and room.

Alot depends on international commodity prices, which is scary at the moment across the spectrum.
 

ziaulislam

ELITE MEMBER
Apr 22, 2010
15,445
10
14,872
Country
Pakistan
Location
United States
PTI Controlling Interest Rate and Petrol Prices is much worse what PMLN did in CA.

It is crime to control interest ,where the rate negative and it should be beyond 10. Moreover, why PTI wants to control Petrol prices where the country cannot sustain it and it lead another disaster ,which will be CAD and fuel adjustment with a missive hike.

PTI doing what is everything wrong and political motive. Desperate growth does not sustain because measure are desperate and not organic.

In my point of view, Finance matter should be handle by Army and should be taken from Polticial parties because they care about winning election. PTI or any other party is not more Important than Pakistan. Only Pakistan is important.
There is no subsidy on oil just decrease additonal surge levy collection
It will hit govt revenues but in essense is a wrong practice what govt did should be appreciated ...additonal surges beyond sales tax shouldnt happen focus should be on direct taxation

Interest rates are at 7% this is pretty high dont know if u can jack them further without hurting the economy..

Inflation ks due to high demand and poor productivity not interest rates..opening imports and subsidizing rupee can cure this inflation immediately what PMLN did
Reserve are negative yar. It is 7.3 billion negative due to IMF liabilities. In PMLN it was 7.6 billion negative.

This is because we prematurely are pausing IMF program and it is a condition if we compelete IMF program than only that Loan can be considered as 10-30 years installment.


Reserve are same, no improvement in anything expect remittance. In PMLN era, PSX was 110 billion dollar worth now it is even proper 50 billion dollar worth. No industrial investment like PPP and PMLN had, no major B2B business are coming, companies will never invest in country where it's currency can devalue 60 to 50 paisa against dollar everyday. Do you see any currency right now in entire region or any other country going losing around 50 paisa everyday?

Only Pakistan has problems?


BTW your REER chart of Bangladesh is of 2020. We are in 2021.
If we are going to make numbers then why not make more number why stick to 7.3b$ why not say -20b$
 

Patriot forever

FULL MEMBER
Jun 2, 2020
1,723
3
3,351
Country
Pakistan
Location
Pakistan
Reserve are negative yar. It is 7.3 billion negative due to IMF liabilities. In PMLN it was 7.6 billion negative.

This is because we prematurely are pausing IMF program and it is a condition if we compelete IMF program than only that Loan can be considered as 10-30 years installment.


Reserve are same, no improvement in anything expect remittance. In PMLN era, PSX was 110 billion dollar worth now it is even proper 50 billion dollar worth. No industrial investment like PPP and PMLN had, no major B2B business are coming, companies will never invest in country where it's currency can devalue 60 to 50 paisa against dollar everyday. Do you see any currency right now in entire region or any other country going losing around 50 paisa everyday?

Only Pakistan has problems?


BTW your REER chart of Bangladesh is of 2020. We are in 2021.
1623219268517.png


This post below is in reply to someone else who posted the same above table regarding reserves. I hope you understand the difference.

"You came to that conclusion because you didnt understand the table. You have no idea what that table actually represents.

June 2016 $ 7908m
December 2017 $ 221 m
March 2018 - ve $ 3166m
June 2018 - ve $7017

In 2 years you lost $15 b in reserves from $ 7908m to - ve 7017m.

Cant you see why we were on the brink of default. Cant you simply see how much money we were loosing? We would be - ve $30b by now (without taking into account the acceleration trend).


In the next 2 years you just lost $900m,and it is actually moving in the opposite direction.

June 2021 figures will surprise you. You will see a further massive improvement.
This is on top of massive maturing debt and interest payment which Pakistan has to make in near to medium term. ( $20b figure) compare that to 2018 which was 4b less.


Bhai uper say itra raha hai after this chawal post, like he posted something very intelligent. You literally proved why Pakistan was on the brink of default in 2018 with exponentially deteriorating situation as seen in table. How much we have stabilized it in the past 2 years".



REER GRAPH.
The graph is for India not Bangladesh. Actually after this the India rupee was undervalued and RBI bought huge amounts of dollars from market and increased their reserves massively. (The reason for posting this was for you to understand that Indian rupee is broadly market based over the course of a decade)
 

Desprado

FULL MEMBER

New Recruit

Jun 30, 2018
85
0
83
Country
Pakistan
Location
Pakistan
View attachment 755532

This post below is in reply to someone else who posted the same above table regarding reserves. I hope you understand the difference.

"You came to that conclusion because you didnt understand the table. You have no idea what that table actually represents.

June 2016 $ 7908m
December 2017 $ 221 m
March 2018 - ve $ 3166m
June 2018 - ve $7017

In 2 years you lost $15 b in reserves from $ 7908m to - ve 7017m.

Cant you see why we were on the brink of default. Cant you simply see how much money we were loosing? We would be - ve $30b by now (without taking into account the acceleration trend).


In the next 2 years you just lost $900m,and it is actually moving in the opposite direction.

June 2021 figures will surprise you. You will see a further massive improvement.
This is on top of massive maturing debt and interest payment which Pakistan has to make in near to medium term. ( $20b figure) compare that to 2018 which was 4b less.


Bhai uper say itra raha hai after this chawal post, like he posted something very intelligent. You literally proved why Pakistan was on the brink of default in 2018 with exponentially deteriorating situation as seen in table. How much we have stabilized it in the past 2 years".



REER GRAPH.
The graph is for India not Bangladesh. Actually after this the India rupee was undervalued and RBI bought huge amounts of dollars from market and increased their reserves massively. (The reason for posting this was for you to understand that Indian rupee is broadly market based over the course of a decade)
Do you know why India buy from dollar from the market?

Anyone who says that we are stabilize is a crime and hope anyone in media who says that we are stabilized should be trailed under Military court.

Borrowing 16.5 billion dollar to finance the budget of 2021 is not stabilized and it means that we are standing on same ground as 2018. Situation is worse than 2018 because of market base currency ,which did not bring even bring 0 favor for Pakistan.
 

Desprado

FULL MEMBER

New Recruit

Jun 30, 2018
85
0
83
Country
Pakistan
Location
Pakistan
Probably had heavy net inflow of dollars, SBP did the same but not to that extent (for obvious reason we are a smaller and much more rudimentary economy).
Because they have many USA companies ,which wants more profit in term Indian rupee when they inflows and they silicon valley.
Probably had heavy net inflow of dollars, SBP did the same but not to that extent (for obvious reason we are a smaller and much more rudimentary economy).
Bangladesh also buy from the market as well ,however, they do not have impact like Pakistan because they have currency is semi peg not like Pakistan fully market base and leave it to hands on a one person.

You will and you can Screenshot that this Market base currency method will not survive PTI is bound to lose 2023 due to this method. Pakistan has now more problems due to this market base currency.
 

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


Top Bottom