Pakistan should peg the currency

[Baburfromsarmarkand]

The west wants to buy our exports cheap, that is why they force us to devalue rupee. USA has been printing dollars since Brettenwood agreement without pegging itself to gold reserves itself. Use Rouble, Yen, Touman as much as possible.

We should convert to gold and silver currency and also start barter trade with Iran, Afghanistan and China. Barter trade was going on with India though Kashmir during Musharraf era.

we should join opec as an honorary member slated to be a full member once we find oil. We will then hold some sway over petroleum currency exchange and have some chance of breaking the old bretton-woods system

 

[Abdul Rehman Majeed]

Islam mandates gold standard. This is not a real currency. Gold Silver or even silicon these days would be a good item to back our currency with

Pegging to gold is a great idea.

 

[Chute]

This guy is a total idiot. I thought I was idiotic with all the anti-establishment stuff ... But this guy is on a whole other level of stupid.

Its an Indian that enjoys the false flagging and the responses it generates.

Establishment here seems reconciled in keeping this cretin around.

 

[R2D2]

Pegging the Rupee on a fixed rate to the Dollar could be counter-productive as we would be challenging the IMF and US hegemony directly. A more prudent measure would be to reduce the unnecessary imports, remove the subsidies, reduce the non-development expenditure and reduce the level of unnecessary communication projects like the proposed Railway line.

 

[MH.Yang]

The Chinese CNY can be pegged to the dollar because China has enough foreign exchange reserves to acquire all the renminbi that is being sold off at low prices.

You can't peg a currency just because "you want to".

 

[epebble]

The Chinese CNY can be pegged to the dollar because China has enough foreign exchange reserves to acquire all the renminbi that is being sold off at low prices.

You can't peg a currency just because "you want to".

Without having huge reserves of foreign currency, pegging means nothing. If Rupee decreases in real value (say with respect to oil or gold), and people want to exchange it for another currency, where will that come from?

The OP probably means dollarization. That may be an option. But it comes with its own set of problems. First, to replace the existing rupees in circulation with dollars, somebody has to supply them. At present there is not enough of dollars to do that. Suppose, magically, SBP borrows and replaces all rupees in circulation with dollars, it (SBP) will immediately become irrelevant in setting monetary policy. It can't set 22% interest rate because nobody can provide that interest when the international rate is, say, 5%. Since SBP/Government of Pakistan can't engage in deficit financing and expansionary policy to cover deficits in production/supply, there will be shortage of goods instead of inflation. Read about empty store shelves in USSR to see how a 'pegged' economy works. In USSR, prices were 'pegged' i.e. fixed. In the absence of inflation to control demand, stuff simply was not available. Remember the riots over cheap/subsidized bread flour? Imagine that happening for everything: Food, fuel, medicines, etc., You don't have to have rich imagination: this is the situation today in North Korea and Cuba.

North Korean market:

Cuba market