Rupee devaluation in Pakistan? Currency drops most in 9 years

[wiseone2]

I would like to know that if the budgetary deficit is under 5% of the GDP and inflation well around 4%. Why do we need to devalue the rupee. It's a fact that there is no correlation between the devaluation and the boosting exports.

in theory devaluation makes your exports cheaper and improves competitive situation
For Pakistan it does not make sense to devalue the currency.

 

[jetray]

And a weak currency is helpful for a totally export driven economy like china

right makes exports cheaper but imports will cost a bomb.

The loan repayments are going to get all the more difficult.

exactly it will become a big pain in the arse, exports need to rise to keep up with payments.

 

[H!TchHiker]

Pakistan’s rupee plunged the most in nine years, after the central bank was said to have devalued the currency as South Asia’s second largest economy showed signs of stress ahead of elections next year.

The rupee fell 3.1 per cent to 108.1 against the dollar at 2:29 p.m. local time on Wednesday, the lowest level since December 2013, according to data compiled by Bloomberg. The move was a “long overdue” devaluation, Karachi-based Topline Securities said in a research note. State Bank of Pakistan spokesman Abid Qamar declined to comment.


Read more at:
http://economictimes.indiatimes.com/articleshow/59457080.cms

came back to 104 again

 

[jetray]

It's good for a msnufacturing economy, with CPEC, Pakistan will be manufacturing power house.

CPEC is more of a infrastructure to support goods/raw materials originating to/from china. Wat are the goods that pakistan is expected to export using CPEC?

 

[H!TchHiker]

Now Pakistan is the 2nd worst in saarc region .
Dollar rates
Inr 64.8
Bhutan 64.8
Sri Lanka 150
Bangla 80
Nepal 103
Afghan 68.3
Pak 108

I wish you had gone through some economics lesson before commenting like an ignorant

 

[VCheng]

"Lost in the whole drama is the elementary truth that the country’s external accounts have widened to unsustainable levels, and depreciation in the rupee is inevitable. The longer that decision is delayed, the greater the eventual shock is going to be. "

https://www.dawn.com/news/1343638/rupee-depreciation

By the time the next elections come around, my guess is that the rupee will be around the 130 mark, looking to seek 150 in a few years. The only question is going to be how bad the shock will be when oil prices rise, as they will do inevitably, ending the discount the energy import bill is enjoying at the moment.

 

[bafxet]

in theory devaluation makes your exports cheaper and improves competitive situation
For Pakistan it does not make sense to devalue the currency.

What remarkable numbers have we been able to add into the volume of our exports since we have started devaluation of the rupees....none. The effect of devaluation is very short lived, we must address the underlining factors which actually contribute to the export growth. At this moment the one most important reason is improving the Brand image 'Pakistan' which is tarnished because of terrorism. Secondly, our export base is very narrow and we must work on broaden it. The Govt, Chamber the TDAP, are running a brain deficit.

 

[Kabira]

Given the economy's fundamentals. the PKR will average about 10% annual decline in value averaged over longer periods of time, short term interventions notwithstanding.

That's not how it works considering rupee devalued 0% over last 9 years. Even now it went back to Rs105.

 

[wiseone2]

What remarkable numbers have we been able to add into the volume of our exports since we have started devaluation of the rupees....none. The effect of devaluation is very short lived, we must address the underlining factors which actually contribute to the export growth. At this moment the one most important reason is improving the Brand image 'Pakistan' which is tarnished because of terrorism. Secondly, our export base is very narrow and we must work on broaden it. The Govt, Chamber the TDAP, are running a brain deficit.

I agree with you 100%

 

[VCheng]

That's not how it works considering rupee devalued 0% over last 9 years. Even now it went back to Rs105.

It was about 60 to a dollar ten years ago, Sir, and now approaching half that value. The longer the overdue adjustment is delayed, the more painful it will be.

https://www.investing.com/currencies/usd-pkr-historical-data

 

[Kabira]

It was about 60 to a dollar ten years ago, Sir, and now approaching half that value. The longer the overdue adjustment is delayed, the more painful it will be.

https://www.investing.com/currencies/usd-pkr-historical-data

View attachment 409593

Sorry I meant pretty much same rate as when N league toke over in 2013. Only under PPP rupee tanked without increasing any exports what so ever. Idea of devalue currency to increase export doesn't work in Pakistan.

 

[VCheng]

Sorry I meant pretty much same rate as when N league toke over in 2013. Only under PPP rupee tanked without increasing any exports what so ever. Idea of devalue currency to increase export doesn't work in Pakistan.

The present value of PKR is being shored up artificially and a crash in value is overdue, given that the fundamentals of economic growth remain adverse. It is only a matter of time.

 

[wiseone2]

The present value of PKR is being shored up artificially and a crash in value is overdue, given that the fundamentals of economic growth remain adverse. It is only a matter of time.

Devaluation might impact the stock market. That is the reason it is being shored up (if what you say is true)

 

[VCheng]

Devaluation might impact the stock market. That is the reason it is being shored up (if what you say is true)

"Somewhat contrary to his claim that the dollar-rupee exchange rate would be determined by market forces, the finance minister also said it had been decided that the value of the dollar against the rupee would be maintained somewhere between Rs107 and Rs105."

https://www.dawn.com/news/1343602/finance-minister-intervenes-to-arrest-slide-in-rupees-value

They will try to play this game until the run up to the elections. Then the inevitable consequences will catch up.

 

[wiseone2]

"Somewhat contrary to his claim that the dollar-rupee exchange rate would be determined by market forces, the finance minister also said it had been decided that the value of the dollar against the rupee would be maintained somewhere between Rs107 and Rs105."

https://www.dawn.com/news/1343602/finance-minister-intervenes-to-arrest-slide-in-rupees-value

They will try to play this game until the run up to the elections. Then the inevitable consequences will catch up.

stock market is propped up for the big guys whoever they may be