Pakistan's rupee has staged a smart recovery against the US dollar

[mourning sage]

Just curious.... How do you know SBP started buying dollars when REER of PKR reached 100?

So it means SBP wants to keep dollar around range of around PKR 150 per USD for now?

A couple of weeks back the dollar was falling rapidly. The State Bank entered the market and started buying Dollar to prevent further depreciation. The news was covered by the media.

It is important to maintain a relatively stable rate. Rapid changes hurt investor confidence and negatively impact market sentiment. Gradual appreciation or depreciation is needed. Though I still believe that the rate should be kept around 155-160 for the next several years.

not true at all.

An overpriced dollar is no good for anything especially exports.
This results in high input costs making our product non-comparative in the international market. For our product to be truly competitive dollar exchange rate needs to be brought down to under RS 100 at around Rs70.
Tha will bring balance to our economy, what we are experiencing now is a bubble, which we will not be able to sustain in the long run unless we are able to bring the price of dollar down.

You are correct, partially. The reverse is also true. If the raw material gets expensive, imported consumer goods also get expensive and the economy moves towards product substitution and domestic production. Also, you missed a crucial detail. Depreciated Rupee with the same level of duty on capital equipment and raw material is bad for economy, very very bad. But if the impact of the depreciation can be offset by charging zero duties on imported raw material, equipment, our products can become competitive in both the domestic and international markets.

As the fiscal space increases, we will see greater subsidies across the value chain which will only strengthen our LSM. So hold your horses. IK undertook a massive economic correction which if continued for the next 5-6 years will propel us towards a major economic power house. for that, IK has to win which I dont see happening.

 

[Crimson Blue]

A couple of weeks back the dollar was falling rapidly. The State Bank entered the market and started buying Dollar to prevent further depreciation. The news was covered by the media.

I totally missed that news which came out in March 2021. Thanks for pointing it out without flaming.

So from days of Ishaq Dar when Pakistan was selling USD to artificially keep PKR afloat, we have now arrived to this time when Pakistan is buying dollars to prevent rise of PKR....... just wow

No wonder this news was suppressed so it flew under the radar.

SBP buys dollars to support exporters

 

[ziaulislam]

I totally missed that news which came out in March 2021. Thanks for pointing it out without flaming.

So from days of Ishaq Dar when Pakistan was selling USD to artificially keep PKR afloat, we have now arrived to this time when Pakistan is buying dollars to prevent rise of PKR....... just wow

No wonder this news was suppressed so it flew under the radar.

SBP buys dollars to support exporters

Its against whats right and poltical need

Right approach is to keep devalue at 150ish but then inflation is going to run high(as everywhere due to dollar printing)

Growth should be allowed at some fiscal expanse now given we are still surplus..

 

[BATMAN]

Thanks to COVID... we receive more remittances and less willing peddlers of riyal & dinar out of Pakistan.

 

[VCheng]

Its against whats right and poltical need

Right approach is to keep devalue at 150ish but then inflation is going to run high(as everywhere due to dollar printing)

Growth should be allowed at some fiscal expanse now given we are still surplus..

The right approach is to remain in compliance with the current IMF program, which is what has stabilized the value thus far since its signing. Exiting it would not be good for the PKR value.

 

[ziaulislam]

The right approach is to remain in compliance with the current IMF program, which is what has stabilized the value thus far since its signing. Exiting it would not be good for the PKR value.

Depends upon your CAD
IMF program is broad brush whose goal is simply fiscal balance
They dont think about growth or poverty

But as no other country will lend u, u r stuck in the program till it runs its course

Otherwise deficit is fixed but that doesnt mean u dont need imf blessing for private lenders to lend u to roll over old loans

 

[BATMAN]

The right approach is to remain in compliance with the current IMF program, which is what has stabilized the value thus far since its signing. Exiting it would not be good for the PKR value.

IMF had refused until Saudis chip in with 6billion$ aid.