Rupee firms against US dollar

[Bilal.]

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(And cue the personal attacks. How utterly boringly predictable! )

Just some light fun

And no the injection of 1.5billion never happened in the open market, so its not currency manipulation. Honestly, no one in the world can call it currency manipulation.

Receiving aid/grant is not equal to currency manipulation in any sense of the word.

 

[VCheng]

Just some light fun

And no the injection of 1.5billion never happened in the open market, so its not currency manipulation. Honestly, no one in the world can call it currency manipulation.

Receiving aid/grant is not equal to currency manipulation in any sense of the word.

Manipulation can be "direct" which is what you are going by, but it can also be "indirect", as is the case here. Both are manipulation, like it or not.

 

[Tameem]

These are all signs of market manipulation, not any strength in the fundamentals.

Absolutely Wrong! If GOP hide that injection & new status/strength of fundamentals from public that would be a market manipulation.

 

[Bilal.]

Manipulation can be "direct" which is what you are going by, but it can also be "indirect", as is the case here. Both are manipulation, like it or not.

Show me one book of economics that says receiving aid is "indirect" currency manipulation and I'll shut up. Until then it's just your wrong understanding of what currency manipulation actually means, sorry to say.

Absolutely Wrong! If GOP hide that injection & new status/strength of fundamentals from public that would be a market manipulation.

If GOP had used that grant to flood the market with dollar supply then it would have been called manipulation.

 

[VCheng]

Absolutely Wrong! If GOP hide that injection & new status/strength of fundamentals from public that would be a market manipulation.

There is much for the GoP to hide. Some of it it will soon become evident due to the inevitable market forces.

Show me one book of economics that says receiving aid is "indirect" currency manipulation and I'll shut up. Until then it's just your wrong understanding of what currency manipulation actually means, sorry to say.

The GoP stopped the SBP from soaking up the dollar supply and took other measures to ease the supply in the markets. This is still manipulation by any other name.

 

[Tameem]

There is much for the GoP to hide. Some of it it will soon become evident due to the inevitable market forces.

Aaahhh....Now you'r escaping towards politics

 

[Bilal.]

The GoP stopped the SBP from soaking up the dollar supply and took other measures to ease the supply in the markets. This is still manipulation by any other name.

Ok show me one book of economics that says if a government stops buying from open/inter bank market because it doesn't need to anymore, it would be called currency manipulation.

 

[Tameem]

In @VCheng Economics books......Govt needs to hide of a sudden change in the fundamentals &
Didn't react abruptly through its Central bank to any upgraded status in order to avoids bumps in market rythem

 

[VCheng]

because it doesn't need to anymore

Does not need to anymore?

to avoids bumps in market

Avoid bumps in the market? The GoP CREATED the recent bump!

 

[Bilal.]

Does not need to anymore?

Yes it doesn't need to, because in flows increased. Including export proceeds, remittances, IMF loan tranche and aid. After all that the government does not need to buy from open or inter bank market, why is it so hard to digest?

 

[Tameem]

Avoid bumps in the market? The GoP CREATED the recent bump!

Ya..ya...you means SBP shouldn't avoids eating dollars from the market despites its stomach went full

 

[VCheng]

Yes it doesn't need to, because in flows increased. Including export proceeds, remittances, IMF loan tranche and aid. After all that the government does not need to buy from open or inter bank market, why is it so hard to digest?

Except remittances, these are measures that increase long term debt and make the outlook even more adverse. The exports are going to pay the price of the decreased competitiveness due to the present bubble soon, and the effect of the sudden injections will wear out. What do you think will happen when all these repayments become due?

Ya..ya...you means SBP shouldn't avoids eating dollars from the market despites its stomach went full

The SBP will have a bigger problem when the repayments come due.

 

[Bilal.]

Except remittances, these are measures that increase long term debt and make the outlook even more adverse. The exports are going to pay the price of the decreased competitiveness due to the present bubble soon, and the effect of the sudden injections will wear out. What do you think will happen when all these repayments become due?

That s a different debate for now let's conclude on the currency manipulation. As I said, not needed to buy is not equal to currency manipulation and hence the recent increase in rupee's worth is Market driven and not the result of currency manipulation.

 

[Tameem]

Except remittances, these are measures that increase long term debt and make the outlook even more adverse. The exports are going to pay the price of the decreased competitiveness due to the present bubble soon, and the effect of the sudden injections will wear out. What do you think will happen when all these repayments become due?



The SBP will have a bigger problem when the repayments come due.

Another Wrong Idea....the raw material used by Pakistani exporters (Most of which Textile, Rice etc) are purchased in Pak Rupees which have minimum reflection of dollar change even Salaries paid by these exporters to their employees are in PKR which hardly change in "Year".

 

[VCheng]

Another Wrong Idea....the raw material used by Pakistani exporters (Most of which Textile, Rice etc) are purchased in Pak Rupees which have minimum reflection of dollar change even Salaries paid by these exporters to their employees are in PKR which hardly change in "Year".

Think about what you just said: The costs are incurred in PKR which remain the same, while sales abroad get less USD than before. What happens to the profit? I spend 110 rupees making a shirt. I would have sold it for 1 dollar abroad and covered my costs plus a small profit. Now I will get back only 98 PKR if I sell it for the same dollar. How will I cover my costs? Or should I increase my price to $1.10 to cover my cost, but then who will buy my more expensive shirt?

hence the recent increase in rupee's worth is Market driven and not the result of currency manipulation.

Let us agree to disagree and move on. The present bubble will soon burst revealing the manipulation for everyone to see, I have no doubt.