Cheetah786
PDF VETERAN
- Joined
- Aug 23, 2006
- Messages
- 9,002
- Reaction score
- -3
- Country
- Location
The abrupt revaluation of the Pakistani rupee has raised several questions. At what level will the exchange rate eventually settle? At what point must the government or the central bank intervene to stop it from appreciating further to forestall a fresh turmoil in the economy? Will rising currency value disrupt growth? And last but not least how sustainable is the trend?
“Before you answer these questions, you should know what has caused the rupee to move up at such breakneck speed? Without that information, it’ll be difficult to make sense of what is going on,” well-known economist Dr Hafeez Pasha, who was state minister in the second Nawaz Sharif government, told Dawn.
The economist was obviously referring to reports of Pakistan receiving $1.5bn contributed to the recently formed Pakistan Development Fund (PDF) by two ‘friendly Gulf states’.
“Unless we know whether the money has been disbursed as a grant or a loan and on what terms and cost, how can we forecast?”
Where the PDF remains shrouded in mystery, it creates plenty of room for speculation. It creates room for those who attribute the revaluation of the rupee to heavy, panic-selling of dollars, mainly by exporters and ‘investors’. There are others who insist the ‘unexpected’ inflows through the PDF are the main, if not the only, trigger. The market is abuzz with rumours of Saudi Arabia and Kuwait, finally, stepping in to help the Nawaz Sharif government prop up the economy.
“If the report is correct, it means the ‘Nawaz dividend’ has paid off. But this must have come with a high price tag,” Dr Pasha argued.
The high price tag could have been a shift in Islamabad’s Syria and Iran policy and, probably, the government’s stance on the treason trial of retired general Pervez Musharraf.
The rupee has gained well above six per cent against the greenback, strengthening to 98.2 a dollar in the inter-bank market on Wednesday from 104.9 on March 1, and no one is sure where it will stop.
Curious case of rupee rise - DAWN.COM
“Before you answer these questions, you should know what has caused the rupee to move up at such breakneck speed? Without that information, it’ll be difficult to make sense of what is going on,” well-known economist Dr Hafeez Pasha, who was state minister in the second Nawaz Sharif government, told Dawn.
The economist was obviously referring to reports of Pakistan receiving $1.5bn contributed to the recently formed Pakistan Development Fund (PDF) by two ‘friendly Gulf states’.
“Unless we know whether the money has been disbursed as a grant or a loan and on what terms and cost, how can we forecast?”
Where the PDF remains shrouded in mystery, it creates plenty of room for speculation. It creates room for those who attribute the revaluation of the rupee to heavy, panic-selling of dollars, mainly by exporters and ‘investors’. There are others who insist the ‘unexpected’ inflows through the PDF are the main, if not the only, trigger. The market is abuzz with rumours of Saudi Arabia and Kuwait, finally, stepping in to help the Nawaz Sharif government prop up the economy.
“If the report is correct, it means the ‘Nawaz dividend’ has paid off. But this must have come with a high price tag,” Dr Pasha argued.
The high price tag could have been a shift in Islamabad’s Syria and Iran policy and, probably, the government’s stance on the treason trial of retired general Pervez Musharraf.
The rupee has gained well above six per cent against the greenback, strengthening to 98.2 a dollar in the inter-bank market on Wednesday from 104.9 on March 1, and no one is sure where it will stop.
Curious case of rupee rise - DAWN.COM
