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Interesting question, but asked in wrong way. let put some facts around it w.r.t. to devaluation of currencyAs a currency depreciates, it weakens the purchasing power of that country...including its importers. So the general trend is a decline in imports.
The opposite happens for foreign importers...their currency now stands stronger comparatively...and hence the general trend is that exports of the country whose money got depreciated, increase.
Of course I could be wrong since I'm no expert and only going off of general trends. Could u perhaps shed more light on why the general trend wouldn't happen in this case?
Burden of debt denominated in foreign currency will increase.
If the loan is denominated in local currency, it become easier to pay off...
There are some more places much before this post, I have mentioned what's coming, don't recall where I posted. Anyway this is exactly the words mentioned in the post way back in Sept 2017.
Soon you will have a bomb of Inflation & devaluation. Your currency will slowly go out of control without FDI coming & all the above numbers reversing fast. PKR will cross 110 at the turn of 2018 for sure according to me. If it doesn't cross 115 by the turn 2019 you will be lucky. This will have severe impact on your cost of living. Your oil prices, basic daily needs, cooking oil prices are going to sky rocket in next 2-3 years.
https://defence.pk/pdf/threads/us-weighs-dropping-pakistan-as-an-ally.518266/page-5#post-9877317
Kindly read the post no. 67 in the link above. I have taken my time & effort many times reminding them, their economy is in crisis. I had told when PKR was trading @ 104/105 levels it will touch 110 by 2018 & 115 soon.
The forex reserves is fast depleting & there will be heavy pressure on your currency when you have to repay loans or delay oil & other import payments. You will again have to pay interest & penalty. Let us see if Pakistan is able to keep the currency at 115 or I will again come right.
It's time you shed your ego & give up India hatred & Kashmir to bring some ray of hope. It's already late.
It was long overdue.. good for the economy.
It will reduce import and encourage local produce.Not, if the import is almost double of export.
It will reduce import and encourage local produce.
I will impose tax on imported cars, electronics, luxury items on top of costly dollar.
^Import substitution in an already protectionist economy is a recipe for disaster impeding growth rate, decreasing efficiency and the quality of manufactured goods, further depleting forex reserves. It is simply not feasible for a country neck-deep in debts with negligible manufacturing base.
Till then they should stop using the non essential commodity.Local production requires infrastructure, which they lacks tremendously and will need at least 4-5 years to build, and even for that, they will needs loan from external sources.
Not really if you use it prudently. Motorbike and Home Electronics are flourishing in Bangladesh with right tariff incentives. We opened it first to create market, and now squeezing it to make the importer to produce locally. It worked like miracle.^Import substitution in an already protectionist economy is a recipe for disaster impeding growth rate, decreasing efficiency and the quality of manufactured goods, further depleting forex reserves. It is simply not feasible for a country neck-deep in debts with negligible manufacturing base.
Agreed. And to top it all the fiscal deficit for the preceding year stands at a whooping 6.3% of GDP. Pakistan simply cannot afford to provide any more subsidy than it currently offers to kick start domestic manufacturing of that scale.Local production requires infrastructure, which they lacks tremendously and will need at least 4-5 years to build, and even for that, they will needs loan from external sources.
Quality will be the last thing they should be thinking about now.
Till then they should stop using the non essential commodity.
Good in what respect?It was long overdue.. good for the economy.