Pakistan agrees to depreciate rupee In talks with IMF

[Advocate Pakistan]

Devaluation takes immediate toll on GDP in dollar terms. Export may or may not raise depending on local industry capabilities and their marketing capabilities. With 2/3rd's of your exports being textiles, you'll struggle even with devaluation. Also devaluation doesn't raise exports magically overnight, market takes its own time to assess competitiveness of Pakistani produce but its effect on GDP is immediate and instantaneous.

Told you, not that simple. One will need to write a whole thesis or volume to explain the impacts of exchange rate dynamics.

 

[protest]

Told you, not that simple. One will need to write a whole thesis or volume to explain the impacts of exchange rate dynamics.

Exchange rate dynamics? I thought we were working on a premise that dollar will raise to 125 pkr. Buddy, you are talking on something which is completely out of your league. Please don't bother to reply.

 

[livingdead]

wow.. one indian poster was saying pkr is overvalued and ripe for correction, only 3 days ago... dont remember his id... new member i think..

 

[That Guy]

wow.. one indian poster was saying pkr is overvalued and ripe for correction, only 3 days ago... dont remember his id... new member i think..

Of course it is, why would anyone argue otherwise? It's no secret that the pkr was only at the level it was, because of government intervention.

 

[Kambojaric]

wow.. one indian poster was saying pkr is overvalued and ripe for correction, only 3 days ago... dont remember his id... new member i think..

That is common knowledge mate. The way Pakistani exports have collapsed in the past 4 years is the most obvious example. Despite the GSP+ status, our textile sector has not been able to compete with Bangladesh and Vietnam's, all whilst the rising wages in China make the situation ripe for other countries to become more competitive. If anything this is good news as PML N for political reasons was artificially strengthening the PKR to make the layman think the economy was strong.

 

[ziaulislam]

Of course it is, why would anyone argue otherwise? It's no secret that the pkr was only at the level it was, because of government intervention.

exactly, if you look at international market every currency has lost 10-20% value except Pakistan which has been valued same 105 for last 5 years (infact was artificially brought up to 100)

i think the real value is around 110-115

india currency in dec 2012 54 rs to 1$
dec 2013=60rs
now 64rs to 1$
loss= 20% from 2012 and 8-10% from 2013

pak rupee dec 2013= 107(was artifical kept high similarly in dec 2012 before elections)
pak rupee dec 2012=98
pak rupee today =105
loss less than 5% from 2012 and gain from 2013

rupees has been allowed to go down it might settle around 110 rs this is what IMF says 5-20% if we assume 10% than value would settle around 113, if 5% than around 107

the reason here is poltical as some how politicians use this as an indicator of economy which is completely wrong

everyone asks why indians are so much attached to pakistan, let me asnwer this question
india is not a single country, never has been, the reason why they promote Pakistani hatred is to keep them selves united, the day they let go of this, india will break

http://www.x-rates.com/historical/?from=INR&amount=1&date=2013-12-17

PS:
pak rupee was given free hand in last two days it jumped to 110 and than came back as people realized that it might be undervalued
anyway i think it will settle around 110 losing around 8%(from 103) which is inline with IMF prediction(5-20%)

https://www.dawn.com/news/1375449/in-talks-with-imf-pakistan-agrees-to-depreciate-rupee

That is common knowledge mate. The way Pakistani exports have collapsed in the past 4 years is the most obvious example. Despite the GSP+ status, our textile sector has not been able to compete with Bangladesh and Vietnam's, all whilst the rising wages in China make the situation ripe for other countries to become more competitive. If anything this is good news as PML N for political reasons was artificially strengthening the PKR to make the layman think the economy was strong.

other reasons are poor policies rather than purely the rupee
1. lack of refunds
2. higher taxation on exports
3. high electricity cost
4. lack of electricity
5. lack of gas
6. difficulty in doing business, too many loops
7. high coperate taxation(30% vs 20-25% in otehr countries)
8. infrastutre bottle necks

 

[Viking 63]

Very Bad idea looks they have not learned anything from the past.

 

[somebozo]

Devaluation takes immediate toll on GDP in dollar terms. Export may or may not raise depending on local industry capabilities and their marketing capabilities. With 2/3rd's of your exports being textiles, you'll struggle even with devaluation. Also devaluation doesn't raise exports magically overnight, market takes its own time to assess competitiveness of Pakistani produce but its effect on GDP is immediate and instantaneous.

Pakistan needs to get out of textiles and agriculture produce economy.
We were once the rising star of industrial economy in Asia..
then Bhutto struck with nationalization to destroy the industry and put agrarian hoards in the parliament.

 

[Sugarcane]

PKR's rate is kept lower artificially by government because for our politicians lower exchange rate is something to boost about or bash government.

 

[VCheng]

Devaluation takes immediate toll on GDP in dollar terms. Export may or may not raise depending on local industry capabilities and their marketing capabilities. With 2/3rd's of your exports being textiles, you'll struggle even with devaluation. Also devaluation doesn't raise exports magically overnight, market takes its own time to assess competitiveness of Pakistani produce but its effect on GDP is immediate and instantaneous.

The problem is that, other than raw materials, most value-added exports rely on imported inputs that get expensive with devaluation, thereby reducing the price benefit they would get otherwise. Besides, other global competitors in most sectors provide better products at cheaper prices still.

 

[Advocate Pakistan]

Exchange rate dynamics? I thought we were working on a premise that dollar will raise to 125 pkr. Buddy, you are talking on something which is completely out of your league. Please don't bother to reply.

That's my subject dear.

 

[koolio]

This extremely bad from treacherous politicians, Pakistan once had the strongest rupee in whole of south Asia, stupid PPP devalued the rupee many times in the 90's in order to boost the exports sadly nothing has changed, only the elite make more money simply their illegal wealth is stashed abroad to gain maximum benefits.

 

[somebozo]

This extremely bad from treacherous politicians, Pakistan once had the strongest rupee in whole of south Asia, stupid PPP devalued the rupee many times in the 90's in order to boost the exports sadly nothing has changed, only the elite make more money simply their illegal wealth is stashed abroad to gain maximum benefits.

The key problem is backward ailing industry and exploding population.
When poor people reproduce like herds of animals it is simply multiplication of poverty and make you and me further ditch into poverty as our savings devalue.

Secondly Pakistan is stuck in agarian industry since the cult of Bhutto destroyed this country.
And these export sectors are shrinking day by day, forcing us to devalue currency.
If our industry was based on high tech and non-agarian commodities we could have excelled far better.
Right now we have to beg the world to buy our textiles, mangos and subsidized sugar.

 

[ziaulislam]

The key problem is backward ailing industry and exploding population.
When poor people reproduce like herds of animals it is simply multiplication of poverty and make you and me further ditch into poverty as our savings devalue.

Secondly Pakistan is stuck in agarian industry since the cult of Bhutto destroyed this country.
And these export sectors are shrinking day by day, forcing us to devalue currency.
If our industry was based on high tech and non-agarian commodities we could have excelled far better.
Right now we have to beg the world to buy our textiles, mangos and subsidized sugar.

Best place to start is textiles as its easier , doesnt require skill labour and we have raw material (unlike countries like Bangladesh )
We just need good policies

 

[Chhatrapati]

unlike countries like Bangladesh

But you don't get to outsmart them, because you are not LDC and they are. So, whatever they export gets preference.