GDP rebasing done with 2015-16 base. GDP growth rate for FY21 is 5.57%. GDP size: 55.5 tr or $346 bn. Per capita $1666. Debt to GDP 72%.

[Norwegian]

2nd Indian currency is not overvalued, they have kept their currency in the very neat fair value range and have a very capable and independent RBI.

 

[Black Tornado]

Indian rupee is also over valued in my opinion

Its the exact opposite, our currency is undervalued and RBI is trying to keep it low and thats why USA has put India into the currency manipulators list who keep their currencies artificially low.

 

[Patriot forever]

View attachment 810119

The index you quoted is not the one which RBI follows, it only had I think 8% dollar indexation. They have updated it to make it much more in line with basket of currencies for their trading partners.

 

[GOAT]

Local vertical integration of Pakistani industries is required to combat the perpetual CAD cycles, combined with not artificially supporting the PKR. The social impacts of currency devaluation need to be mitigated by securing the food supply especially for staple foods. These things need to occur in tandem.

 

[Wood]

Maybe but it's not working in Turkey View attachment 810114

Devaluation of currency also has a side effect of becoming a blanket tariff on the cost of imports that are necessary for the exporting industries. Turkey may need some time to find the balance in policy to subsidize the industries. But I think they may succeed if there is political will to sustain the devaluation. Good luck to them.

 

[GOAT]

Devaluation of currency also has a side effect of becoming a blanket tariff on the cost of imports that are necessary for the exporting industries. Turkey may need some time to find the balance in policy to subsidize the industries. But I think they may succeed if there is political will to sustain the devaluation. Good luck to them.

That’s precisely right, currency devaluation makes exports more competitive however it raises input costs for imports. Hence why local vertical integration or input substitution is critical to sustain a currency devaluation / fair value exercise.

 

[Wood]

The index you quoted is not the one which RBI follows, it only had I think 8% dollar indexation. They have updated it to make it much more in line with basket of currencies for their trading partners.

View attachment 810128
View attachment 810129

Its the exact opposite, our currency is undervalued and RBI is trying to keep it low and thats why USA has put India into the currency manipulators list who keep their currencies artificially low.

Unauthorised Access

?Unauthorised

www.rbi.org.in

For a layman, the REER index is a good approximation of currency value. When the REER index is above 100, it is said to be over valued. The Canadian dollar has a REER index of 94 and is said to be undervalued compared to USD.

 

[GOAT]

Unauthorised Access

?Unauthorised

www.rbi.org.in

For a layman, the REER index is a good approximation of currency value. When the REER index is above 100, it is said to be over valued. The Canadian dollar has a REER index of 94 and is said to be undervalued compared to USD.

And might I add CAD valuations are highly sensitive to oil prices, for those that may be wondering. That said I wonder what makes the IKR overvalued relative to the USD? Any insights would be appreciated.

 

[Pakstallion]

Thanks for sharing and your sources and I agree it was probably around 3.8 percent in 2017. This is such an anemic rate and I am sure that number is higher now based on increased good and tech exports.

 

[Wood]

And might I add CAD valuations are highly sensitive to oil prices, for those that may be wondering. That said I wonder what makes the IKR overvalued relative to the USD? Any insights would be appreciated.

As per the REER valuation model, PKR is not over valued anymore. It was certainly over valued for the better part of last decade. Currency valuation models are not exact science, so we cannot be sure about the exact par value for PKR.

 

[hydrabadi_arab]

 

[peagle]

So not 25% increase in nominal GDP as some expected but only 12%.

View attachment 810048

What is your source?

You have not provided a source, and I cannot find any information in the news.

 

[bananarepublic]

Maybe but it's not working in Turkey View attachment 810114

Comparing to turkey Pakistan has fared way better throughout the decades.
During the 80s, turkey had an inflation crunch on its economy reaching 60% inflation for 2 whole decades.
They only recovered in the 2000s and only by stringent monetary policies.
Pakistan on the other hand has faced even worse economic catastrophes, yet we have managed them more better

 

[SaadH]

No one knows the magic number of GDP growth after which we go in to balance of payments crisis. That number is also probably increasing given the increase in exports but deeply affected by oil and palm oil prices. I think 5.37 was probably not bad as they had a minimal CAD that year. Also makes me think we may be touching 7 percent this year with all the problems the current account is having. Really pointless to have that 7 percent though if it causes another balance of payment crisis. They are trying to manage with increased interest rates hopefully slowing things down a bit and hopefully cutting back on the inflation some. Need another 2-3 years of big export growth (plus tech) to allow the economy to really grow at 7-8 percent. By then some of the investments in local edible oil production and import substitution will have moved even further ahead.

Let's not forget the vaccines, second biggest ongoing expenditure besides energy and oil.

 

[GOAT]

As per the REER valuation model, PKR is not over valued anymore. It was certainly over valued for the better part of last decade. Currency valuation models are not exact science, so we cannot be sure about the exact par value for PKR.

Sorry for the typo, I meant INR.