Asia's Worst Performing Currency

[53fd]

Pakistani rupee flat; stocks, o/n rates end lower | Reuters

Dec 13 (Reuters) - The Pakistani rupee ended almost flat on Tuesday and dealers expect the pressure on the local unit to ease in the short term because of increased remittances from Pakistanis living abroad, dealers said.

However stocks ended lower as a U.S Congressional panel froze $700 million in aid to Pakistan until it gives assurances it is helping fight the spread of homemade bombs in the region.

The rupee ended at 89.10/20 to the dollar, compared with Monday's close of 89.10/15. It dropped to a record low of 89.45 on Wednesday.

For Q+A on the Pakistani rupee, click on

"The rupee in the short term may stabilise but in the medium term we are likely to see a slow depreciation because of a bleak outlook for the economy," said a bank dealer.

Remittances from Pakistanis working abroad rose 18.33 percent to $5.24 billion in the first five months of the 2011/12 fiscal year, compared with $4.43 billion in the same period last year.

However in November $924.92 million was sent home by overseas Pakistanis, compared with $926.89 million in November last year.

Pakistan's bleak economic outlook could further punish the rupee in the medium term.

The International Monetary Fund forecasts economic growth for the 2011/12 fiscal year at 3.5 percent, lower than the government's target of 4.2 percent.

Pakistan's current account deficit stood at $1.6 billion in July-Oct compared with $541 million in the same period a year earlier.

Islamabad has to start repaying an $8 billion IMF loan in early 2012, and without additional sources of revenue, its foreign exchange reserves may come under pressure, analysts say.

Foreign exchange reserves fell to $16.68 billion in the week ending Dec. 2. They hit a record $18.31 billion in the week ended July 30.

The Karachi Stock Exchange's (KSE) benchmark 100-share index ended 1.73 percent, or 199.10 points, lower at 11,278.02 on turnover of 41.08 million shares.

"Selling was witnessed in stocks across the board at KSE after reports that leaders of U.S. Senate agreed to freeze $700m in U.S. aid to Pakistan," said Ahsan Mehanti, director at Arif Habib Investment Ltd.

In the money market, overnight rates closed lower at 9 percent, compared with Monday's close of between 9.50 percent and 10 percent amid increased liquidity in the interbank market. (Reporting by Sahar Ahmed; Editing by Ruth Pitchford)

Exports - Imports = Current Account Balance

India's current account balance = -$51.78 billion (3.37% of GDP nominal)
Pakistan's current account balance = -$1.585 billion (0.9% of GDP nominal)

https://www.cia.gov/library/publications/the-world-factbook/rankorder/2187rank.html

India is a huge net importer country.

India's economy is also heavily dependent on FDI. As the rate of FDI inflow in India decreases, it greatly impacts their service industry, & this eventually results in decreasing GDP growth rates. India does not have a manufacturing base like China does that can compensate for the rising inflation & devaluing of its currency the way China can. Pakistan & China also have huge agricultural sectors in the economy as compared to India, & they are not dependent to anyone but mother nature for that. Whereas India's service sector is hugely dependent on the FDI inflows.

India's GDP by sector: services 55.2%, industry 26.3%, agriculture 18.5%
China's GDP by sector: agriculture 39.5%, industry 27.2%, services 33.2%
Pakistan's GDP by sector: agriculture 43%, industry 20.3%, services 36.6%

 

[FairAndUnbiased]

Exports - Imports = Current Account Balance

India's current account balance = -$51.78 billion (3.37% of GDP nominal)
Pakistan's current account balance = -$1.585 billion (0.9% of GDP nominal)

https://www.cia.gov/library/publications/the-world-factbook/rankorder/2187rank.html

India is a huge net importer country.

India's economy is also heavily dependent on FDI. As the rate of FDI inflow in India decreases, it greatly impacts their service industry, & this eventually results in decreasing GDP growth rates. India does not have a manufacturing base like China does that can compensate for the rising inflation & devaluing of its currency the way China can. Pakistan & China also have huge agricultural sectors in the economy as compared to India, & they are not dependent to anyone but mother nature for that. Whereas India's service sector is hugely dependent on the FDI inflows.

India's GDP by sector: services 55.2%, industry 26.3%, agriculture 18.5%
China's GDP by sector: agriculture 39.5%, industry 27.2%, services 33.2%
Pakistan's GDP by sector: agriculture 43%, industry 20.3%, services 36.6%

that's by employment, and apparently they counted all rural residents as "agricultural workers" which is inaccurate.

China's real employment is probably 40/40/20 on services/industry/agriculture. There are 200 million migrant workers in industry alone, out of a total labor force of 800 million (that's just migrant workers; what about normal workers?)

 

[53fd]

that's by employment, and apparently they counted all rural residents as "agricultural workers" which is inaccurate.

No, I don't think its by employment. I know for India & Pakistan it isn't, it's by GDP.

There is nothing wrong with having a huge agricultural sector.

 

[EAsian]

obviously it's not by GDP.
it's about 45：45：10 on s/I/a by GDP

 

[53fd]

I hate wikipedia, someone obviously changed the figures on it right now at this moment for Pakistan:

(cur | prev) 14:00, 13 December 2011‎ 119.159.6.126 (talk)‎ (100,825 bytes) (→Industry) (undo)
(cur | prev) 13:03, 13 December 2011‎ 111.68.103.193 (talk)‎ (100,829 bytes) (undo)

Someone changed the numbers for India:

(cur | prev) 10:03, 13 December 2011‎ Sodabottle (talk | contribs)‎ (103,783 bytes) (not necesarily, intra state migration too happens) (undo)
(cur | prev) 09:22, 13 December 2011‎ 117.196.142.245 (talk)‎ (103,795 bytes) (undo)
(cur | prev) 09:20, 13 December 2011‎ 117.196.142.245 (talk)‎ (103,777 bytes) (undo)
(cur | prev) 05:08, 13 December 2011‎ Jim1138 (talk | contribs)‎ m (103,783 bytes) (Reverted edits by 182.156.17.46 (talk) editing tests or vandalism (HG)) (undo)
(cur | prev) 04:38, 13 December 2011‎ 182.156.17.46 (talk)‎ (103,782 bytes) (→Balance of payments) (undo)

 

[53fd]

Whoever is changing wikipedia cannot change the original source. Found the right percentages:

India

agriculture: 19%
industry: 26.3%
services: 54.7% (2010 est.)

China:

agriculture: 10.2%
industry: 46.9%
services: 43% (2010 est.)

Pakistan

agriculture: 21.2%
industry: 25.4%
services: 53.4% (2010 est.)

https://www.cia.gov/library/publications/the-world-factbook/fields/2012.html

 

[Mirage2000]

Indian rupee is worst performing because it depriciated more than any other currency in asia and that includes pakistan indian rupee came from about 40+ a dollar to 53 while PKR depriciated from 86 to 89.
A depriciating rupee is not a national insult at all as you Indians here have assumed it.
Its so easy for some indian people here to be blindfolded in ultra nationalism and deny the fact that there is a problem with their currency which needs to be corrected.

 

[FairAndUnbiased]

No, I don't think its by employment. I know for India & Pakistan it isn't, it's by GDP.

There is nothing wrong with having a huge agricultural sector.

Economy of the People's Republic of China - Wikipedia, the free encyclopedia

GDP by sector

industry (46.8%), services (43.6%), agriculture (9.6%) (2010 est.)

 

[53fd]

Economy of the People's Republic of China - Wikipedia, the free encyclopedia

GDP by sector

industry (46.8%), services (43.6%), agriculture (9.6%) (2010 est.)

Yes, please check Post # 66. Someone had edited wikipedia.

 

[ephone]

A weak rupee helps the export. It may not be that bad at all.

MUMBAI – The Indian rupee sank to a record low against the U.S. dollar Monday, firming expectations that authorities would take tougher action to protect this year's worst-performing Asian currency.

The rupee has come under renewed pressure in recent sessions amid rising concerns about the government's ability to implement economic reforms to attract foreign capital and resuscitate growth.

The dollar was quoted at 52.84 rupees late Monday in Asia, topping its previous record high of 52.725 rupees on Nov. 22. It was buoyed by a selloff in local stocks after domestic factory output contracted for the first time in more than two years as global risk appetite waned.

Authorities have recently taken steps to attract foreign capital portfolio inflows and made it easier for Indian firms to hedge their currency risks, but analysts now expect tougher measures.

"We could see measures like allowing oil importers to buy dollars directly from the RBI [to ease dollar liquidity] and restrictions on customer transactions," said Anindya Das Gupta, managing director at Barclays Capital.

In recent days, the Reserve Bank of India's tone on the rupee has become more aggressive, with the central bank saying it will use all possible measures, including strategic capital controls, if there is escalating risk of the rupee depreciating.

Last week, RBI Governor Duvvuri Subbarao said the central bank would make a "definitive statement" on the rupee's fall at its next rate-setting meeting Friday.

Monday, local stocks tumbled after government data showed India's industrial output in October contracted 5.1 % from a year earlier, after a 1.9% expansion in September. The Bombay Stock Exchange's Sensitive Index slid 2.1% to close at 15870.35.

The dollar has gained more than 18% against the rupee since March. Concerns over domestic inflation, slowing economic growth and a possible widening of the government's budget deficit have made the local unit particularly vulnerable to bad news emanating from the sovereign debt crisis in Europe.

The rupee's weakness has prompted calls for the government to push through economic reforms to attract foreign capital and stimulate economic growth. Yet a major reform that was on the cards – allowing multi-brand foreign retailers into the country – was shelved last week because of strong opposition to the move.

Analysts say local currency, bond and equity markets could be set for a tumultuous week, with November inflation data due Wednesday, followed by the RBI's rate-setting meeting Friday.

Indian Rupee Hits Record Low - WSJ.com

 

[CardSharp]

One knock-on effect of a sliding rupee is a worsening trade deficit. If you import more than you export and your currency is losing value, your imports are going to get more and more expensive, and money will start flowing out of the country.

(India's widening trade deficit | News and views on emerging markets from the Financial Times)

 

[patna_ke_presley]

Exports - Imports = Current Account Balance

India's current account balance = -$51.78 billion (3.37% of GDP nominal)
Pakistan's current account balance = -$1.585 billion (0.9% of GDP nominal)

https://www.cia.gov/library/publications/the-world-factbook/rankorder/2187rank.html

India is a huge net importer country.

India's economy is also heavily dependent on FDI. As the rate of FDI inflow in India decreases, it greatly impacts their service industry, & this eventually results in decreasing GDP growth rates. India does not have a manufacturing base like China does that can compensate for the rising inflation & devaluing of its currency the way China can. Pakistan & China also have huge agricultural sectors in the economy as compared to India, & they are not dependent to anyone but mother nature for that. Whereas India's service sector is hugely dependent on the FDI inflows.

India's GDP by sector: services 55.2%, industry 26.3%, agriculture 18.5%
China's GDP by sector: agriculture 39.5%, industry 27.2%, services 33.2%
Pakistan's GDP by sector: agriculture 43%, industry 20.3%, services 36.6%

Yes, buddy did you ever looked at the definition of account Balance given in the chart. As I previously told here, Indian economy is based on internal consumption mainly and we Don't get free oil from Saudi Arabia like you are getting, plus you got $3 Billion from US in 2010. Also in 2010, India had growth rate of 8.5%. India has always been a net importer country, I read that even in my school days.

Here are some more facts to make your understanding about Pakistan's economy.
1) Pakistan's international debt=$67 Billion (nov. 2011) & Foreign exchange reserve = $16.6 Billion
Means your international debt is 4 times of your national saving.

2) Have you ever heard of the term "Credit Rating". Recent US credit rating dropped from AAA to AA+. Pakistan has most vulnerable credit rating of B- just one step above CCC rating which makes a country bankrupt any time like you had in 2008. India has rating of BBB-, Bangladesh BB- and China AA-

Credit rating - Wikipedia, the free encyclopedia
List of countries by credit rating - Wikipedia, the free encyclopedia

3) Every year half of Pakistan budget is wasted in repaying back the debt they have taken from IMF/World Bank and ADB.

4) Pakistan right now having a budget deficit of 600 Billion PKR. ($7 Billion)

Pakistan facing acute financial crisis: FBR Chairman | Geo News Blog

 

[53fd]

plus you got $3 Billion from US in 2010.

Don't know where you got that, but Pakistan has had in excess of $70 billion losses fighting the US's war on terror. End result is that Pakistan has a net loss, which impacts heavily on the economy.

Here are some more facts to make your understanding about Pakistan's economy.
1) Pakistan's international debt=$67 Billion (nov. 2011) & Foreign exchange reserve = $16.6 Billion
Means your international debt is 4 times of your national saving.

India's international debt is over $325 billion. And in terms of public debt, India's public debt to GDP ratio is 51.9%, whereas Pakistan's is 50.7%.

2) Have you ever heard of the term "Credit Rating". Recent US credit rating dropped from AAA to AA+. Pakistan has most vulnerable credit rating of B- just one step above CCC rating which makes a country bankrupt any time like you had in 2008. India has rating of BBB-, Bangladesh BB- and China AA-

Credit ratings are the credit rating agencies' opinions, as they acknowledge themselves. They are not very accurate, which is why if the US's credit rating had really been AAA, there would have been no need to raise the debt ceiling.

4) Pakistan right now having a budget deficit of 600 Billion PKR. ($7 Billion)

India's budget deficit % of GDP is 6.06%, whereas Pakistan's is 6.24%.

 

[Mike2011]

One knock-on effect of a sliding rupee is a worsening trade deficit. If you import more than you export and your currency is losing value, your imports are going to get more and more expensive, and money will start flowing out of the country.

(India's widening trade deficit | News and views on emerging markets from the Financial Times)

Trade is done in dollars, I don't think it has any impact. By devaluing rupee we may export more and get more dollars. that will again appreciate rupee again.

 

[FairAndUnbiased]

Trade is done in dollars, I don't think it has any impact. By devaluing rupee we may export more and get more dollars. that will again appreciate rupee again.

Devaluing currency actually reduces exports, as it increases the cost of inputs like petroleum and foreign made machinery.

Don't listen to the stupid US propagandists who tell you countries try to "devalue" to gain an advantage. There is nearly no advantage in devaluing your currency. If there was, Zimbabwe would be #1 economic superpower. With a strong currency, your companies can buy resources, buy technology, and expand to foreign countries at low cost. A weak currency means that you will be spending huge amounts of money importing raw materials.

The only time a weak currency can possibly help a country is when it imports nothing and is a major export power. Needless to say, there is no such country in this world.