In committing to exchange rate peg, PTI is repeating Ishaq Dar’s folly

[nahtanbob]

The only time Pakistani Rupee has ever been stable in fact grew stronger was in Musharaf's time

a) He made habit of Paying down Principle owed to foreign entities not just interest

I do not want to nit-pick. It is "Principal" not "principle"

 

[Nilgiri]

You are now witnessing the swings you were talking about right?
I am confident with my predictions. Rise to around 170 and back and stable at around 150-155 mark by end of year. May miss the targets by a month or so, hopefully not more.

I was saying Pakistan will follow peg still and it comes at some cost. So far its still sticking to peg...even a pretty hard one...which means its using forex liquidity to manage this....probably helped by the first installment of the IMF loan. But will this admin just make the same mistakes long term regarding that as the previous one? We have to see.

It is certainly not confident to free float....there is cost in not being so and we have to see if its worth it.

 

[VCheng]

I was saying Pakistan will follow peg still and it comes at some cost. So far its still sticking to peg...even a pretty hard one...which means its using forex liquidity to manage this....probably helped by the first installment of the IMF loan. But will this admin just make the same mistakes long term regarding that as the previous one? We have to see.

It is certainly not confident to free float....there is cost in not being so and we have to see if its worth it.

The PKR will remain a potent tool to keep the establishment in line with international expectations. I should say no more here.

 

[Arsalan]

I was saying Pakistan will follow peg still and it comes at some cost. So far its still sticking to peg...even a pretty hard one...which means its using forex liquidity to manage this....probably helped by the first installment of the IMF loan. But will this admin just make the same mistakes long term regarding that as the previous one? We have to see.

It is certainly not confident to free float....there is cost in not being so and we have to see if its worth it.

Sir it is free float now! Whatever is happening is a direct result of that. Also i think that by allowing to or being FORCED to let it float free the government is not taking the route previous governments took and what cost us dearly!

 

[Nilgiri]

Sir it is free float now! Whatever is happening is a direct result of that. Also i think that by allowing to or being FORCED to let it float free the government is not taking the route previous governments took and what cost us dearly!

OP article literally says its not a free float...and the exchange rate chart bears direct evidence to that.

In a briefing held at the SBP headquarters in Karachi this month, State Bank Governor Reza Baqir said that: “Neither a fixed exchange rate regime nor a free float is healthy for Pakistan’s economy.

Thus when its clearly not a free float, it just matter of semantics to degree of the peg. I guess we can let another month or two pass and see.

 

[Yaseen1]

I support govt this decision as rupee is already devalued much and we cannot afford further devaluation,exports will only be increased through productivity and not by devaluation

 

[ps3linux]

Over the years there has been a quite understanding in the corridors where the actual decisions are made, that countries like China, Korea, Singapore, Taiwan and japan did not get here by chance they made sure their own currency was undervalued and the flip side improvement in exports, competitive in the exports playing field.

PTI Govt along its current finance team (mind you I know first hand people have spend a good decade in getting this point through to PTI people and Hafeez Sheikh through his brother who is currently a group head in a large bank in Pakistan) has started moving along this path last time I checked the PPP value as around PKR.147, and REEF around 152 so 8-10% undervalued ruppee is better than an overpriced one, former is practically good for the country and later a good political slogan. A peg value is like I said a good political slogan practically its not such a wise decision, besides in my opinion market based pricing of dollar will help us in the long run to move from a consumer economy to a production economy, the caveat though is to keep a check on speculators.