Pakistani rupee getting strong, soon to hit 150 against the dollar

[Arsalan Tauseef]

• Increase in the supply of dollars in the market plays a vital role in the recovery of the rupee.
• The foreign investment of over $1.2 billion has also improved dollar supply and helped strengthen the rupee.
  
  Over the next couple of months, Pakistani rupee is expected to sustain its uptrend and reach up to 150 against the US dollar. The improvement will result in building the country’s foreign currency reserves by captivating surplus banknote in the market.
  
  A textile exporter claimed that by the end of March 2020, Pakistani rupee would reach up to around 150 to the US dollar. Around the fourth quarter (April-June) of the present economic year, the rupee will likely return to its decline phase.
  
  “The rupee may return to 164-165 by the end of FY20,” the economist said on condition of anonymity.
  
  
  SBP Monthly Report
  According to SBP, so far, the rupee has reacquired 5.52% of its value. However, Rs9.07 in around the past six months to 154.98 to the banknote.
  
  “The recovery of the rupee came following a significant increase in the supply of dollars in the market and drop in demand amid a notable reduction in imports, improvement in exports and steady inflow of worker remittances,” stated by The Economist.
  
  Growth of dollar from the trade market by SBP played an important role in the growth of Pakistani rupee.
  
  Since July, a foreign asset of over $1.2 billion in the government sovereign papers, mostly Treasury bills, the regular return of foreign investors to the supply market and enhancement in foreign direct investment (FDI) in oil and gas exploration, power and agriculture also enhanced dollar supply and in turn strengthen the rupee.
  
  To recall, the central bank made a key change to the rupee-dollar exchange rate regime in May.
  
  Source
  -----------------
  https://blog.siasat.pk/pakistani-ru...l-against-the-us-dollar-since-june-this-year/
  

 

[Imran Khan]

i will be happy if its reached 120-110

 

[Valar.]

i will be happy if its reached 120-110

150 is good for Pakistan.
At 110, imported stuff become too cheap which is bad for our local companies.

 

[HRK]

i will be happy if its reached 120-110

that will crash the economy ....

 

[AZ1]

 

[Ali Tariq]

that will crash the economy ....

Wo kaise? Don't know anything about economics, so it will be very interesting to learn this. Thanks in advance.

 

[Kabira]

i will be happy if its reached 120-110

It will go up once date to pay back loans come near.

 

[HRK]

Wo kaise? Don't know anything about economics, so it will be very interesting to learn this. Thanks in advance.

to understand the effects over pricing of currency plz visit: (link)

In most simple term
1 - it will increase the cost of production and services in the country
2 - due to the increase value of money
3 - which mean services, labour, raw material and all other inputs produced in Pakistan will become expensive
4 - and imported good and services will become cheaper therefore imports will increase
5 - this will affect negatively the production and services within the country
6 - which will force local business to either shutdown, layoff, implement adjustments, restructuring, reduction, resizing resulting
7 - Slowdown of local economy
8 - which will further contribute in low consumption of goods and services in country triggering Recession
9 - increase Trade deficit
10 - which will consume the existing foreign reserves
11 - and to meet BOP commitments economy would be forced to take expensive foreign loan
12 - which will force the currency devaluation even if favourable adjustments of exchange rate are implemented
13 - local economy structure which was already suffering by negative effects of artificial overvaluation of currency will not generate the business locally on mass scale to address the situation
14 - as basic economic structure would take let's say 8-10 years to recover to normal status

BTW we have witness all these happening in Past few years in Pakistan .... Recall the era of DAR- Economy

 

[ghazi52]

More dollar will come from aboard for Dam construction fund. You can say a NRO. as they do not want their political activities to an end. Rest you know the details............................
Also country dollar account is increasing on daily basis.
This is a news.

 

[ziaulislam]

Wo kaise? Don't know anything about economics, so it will be very interesting to learn this. Thanks in advance.

Its simple..
Rupee is mean of transaction not a commodity ..

If you bring rupee to 120 you are giving something value which it Doesnt has..

This is like stating out of your house that a pencil cost 1000rs (i am going to buy it from you).. What will happen..your pocket will get crashed ..

So why did the rupee value fell than to 120 to begin with?
Its two things
1. You have to keep devaluating to compete with other economicies
2. Second huge state bank lending

3. Savings and investment will go down as return/interest ratws go down..you need some inflation to drive savings and investment (which were at the lower rate in hustory between 2015-2018

 

[Pakistan Space Agency]

More dollar will come from aboard for Dam construction fund. You can say a NRO. as they do not want their political activities to an end. Rest you know the details............................
Also country dollar account is increasing on daily basis.
This is a news.

They're just loan tranches being released to Pakistan from IMF, WB, ADB, etc. I don't know why PTI is portraying them as investments.

 

[xyxmt]

All arm chair economists at their best

 

[zn426]

If Pakistan can use this opportunity to get more manufacturing presence, it would be good. Especially cell phone and consumer goods manufacturing.

 

[Syed1.]

to understand the effects over pricing of currency plz visit: (link)

In most simple term
1 - it will increase the cost of production and services in the country
2 - due to the increase value of money
3 - which mean services, labour, raw material and all other inputs produced in Pakistan will become expensive
4 - and imported good and services will become cheaper therefore imports will increase
5 - this will affect negatively the production and services within the country
6 - which will force local business to either shutdown, layoff, implement adjustments, restructuring, reduction, resizing resulting
7 - Slowdown of local economy
8 - which will further contribute in low consumption of goods and services in country triggering Recession
9 - increase Trade deficit
10 - which will consume the existing foreign reserves
11 - and to meet BOP commitments economy would be forced to take expensive foreign loan
12 - which will force the currency devaluation even if favourable adjustments of exchange rate are implemented
13 - local economy structure which was already suffering by negative effects of artificial overvaluation of currency will not generate the business locally on mass scale to address the situation
14 - as basic economic structure would take let's say 8-10 years to recover to normal status

BTW we have witness all these happening in Past few years in Pakistan .... Recall the era of DAR- Economy

Key difference being Dar unnaturally kept the ruppee inflated when its actual worth had fallen thereby burning through precious foreign exchange to defend the ruppee.


Now if due to improved economic performance if the ruppee naturally returns to 120 then it wont be as bad as holding it at 120 unnaturally. The two situations are not comparable.

Infact naturally bringing ruppee value down to about a 100 in the next 5-7 years should be ideal.

 

[Ali Tariq]

to understand the effects over pricing of currency plz visit: (link)

In most simple term
1 - it will increase the cost of production and services in the country
2 - due to the increase value of money
3 - which mean services, labour, raw material and all other inputs produced in Pakistan will become expensive
4 - and imported good and services will become cheaper therefore imports will increase
5 - this will affect negatively the production and services within the country
6 - which will force local business to either shutdown, layoff, implement adjustments, restructuring, reduction, resizing resulting
7 - Slowdown of local economy
8 - which will further contribute in low consumption of goods and services in country triggering Recession
9 - increase Trade deficit
10 - which will consume the existing foreign reserves
11 - and to meet BOP commitments economy would be forced to take expensive foreign loan
12 - which will force the currency devaluation even if favourable adjustments of exchange rate are implemented
13 - local economy structure which was already suffering by negative effects of artificial overvaluation of currency will not generate the business locally on mass scale to address the situation
14 - as basic economic structure would take let's say 8-10 years to recover to normal status

BTW we have witness all these happening in Past few years in Pakistan .... Recall the era of DAR- Economy

Its simple..
Rupee is mean of transaction not a commodity ..

If you bring rupee to 120 you are giving something value which it Doesnt has..

This is like stating out of your house that a pencil cost 1000rs (i am going to buy it from you).. What will happen..your pocket will get crashed ..

So why did the rupee value fell than to 120 to begin with?
Its two things
1. You have to keep devaluating to compete with other economicies
2. Second huge state bank lending

3. Savings and investment will go down as return/interest ratws go down..you need some inflation to drive savings and investment (which were at the lower rate in hustory between 2015-2018

Shukriya