Rupee firms against US dollar

[VCheng]

ruppee is now at 99 state bank should maintain it there by buying dollars from open market

For SBP to support the PKR at 98, it will need to SELL the USD in the open market, not buy it. IT has no reserves to do that for very long.

 

[ziaulislam]

For SBP to support the PKR at 98, it will need to SELL the USD in the open market, not buy it. IT has no reserves to do that for very long.

at moment rupee is gaining, it needs to buy it. once rupee starts falling only than it will need to sell
a unstable rupee is always a problem thats why govt should intervene(by buying and building its reserves) before the rupee gains too much due to sentiments. i thin the rupee may have over corrected itself

 

[VCheng]

at moment rupee is gaining, it needs to buy it. once rupee starts falling only than it will need to sell

That is what traders do. SBP has to do the opposite to support the value.

Right now the rupees is gaining because the SBP is easing the supply of dollars in the market by making them available. Once the rupee starts to fall, it will have to buy all those rupees back because nobody will want them if it to stop a sudden fall in value of the rupee. So it will run out of dollars and gain less valuable rupees in exchange. If the SBP starts to buy dollars from the market, that value will rise therefore making the rupee devalued.

Get it?

 

[ziaulislam]

SBP is not doing anything. its not easing dollar by selling it. had it been doing so its reserves will have been going down not up!(up from 2.84 to 3.9 this three weeks)
SBP was doing that during PPPP govt causing massive decrease in its reserves maintaining the dollar at 95 but its not doing this now
SBP should buy only to maintian the rupee not to devalue it. i.e just enough to maintain i.e a few 100 million dollars

 

[VCheng]

SBP is not doing anything. its not easing dollar by selling it. had it been doing so its reserves will have been going down not up!(up from 2.84 to 3.9 this three weeks)
SBP was doing that during PPPP govt causing massive decrease in its reserves maintaining the dollar at 95 but its not doing this now
SBP should buy only to maintian the rupee not to devalue it. i.e just enough to maintain i.e a few 100 million dollars

The reserves are going "up" because SBP is taking on more debt. It is supporting the value of the rupee by easing the dollar supply in the market because it is not soaking up all the dollars it can find given the recent tranche payments.

 

[S.Bukhari]

That is what traders do. SBP has to do the opposite to support the value.

Right now the rupees is gaining because the SBP is easing the supply of dollars in the market by making them available. Once the rupee starts to fall, it will have to buy all those rupees back because nobody will want them if it to stop a sudden fall in value of the rupee. So it will run out of dollars and gain less valuable rupees in exchange. If the SBP starts to buy dollars from the market, that value will rise therefore making the rupee devalued.

Get it?

Now in uk we are getting 163.45 as compare to last week which was 171.82

 

[VCheng]

Now in uk we are getting 163.45 as compare to last week which was 171.82

When the SBP stops buying any foreign currency such as the USD in large amounts, the flood of cheap PKR in the open market reduces a little. That raises the value against all currencies including the GBP.

 

[ziaulislam]

The reserves are going "up" because SBP is taking on more debt. It is supporting the value of the rupee by easing the dollar supply in the market because it is not soaking up all the dollars it can find given the recent tranche payments.

well i cant argue on myths and theories. every known source is saying including state bank that its not selling dollars(as dictated by IMF) and ofcourse the reserves are going up due to loans and inflows from donars especially asian bank and world bank. but would have been going down (even if they would have been getting loans
) had they been selling

 

[VCheng]

well i cant argue on myths and theories. every known source is saying including state bank that its not selling dollars(as dictated by IMF) and ofcourse the reserves are going up due to loans and inflows from donars especially asian bank and world bank. but would have been going down (even if they would have been getting loans
) had they been selling

Okay, we can take up this discussion again in a few weeks' time. Fair enough?

 

[S.Bukhari]

When the SBP stops buying any foreign currency such as the USD in large amounts, the flood of cheap PKR in the open market reduces a little. That raises the value against all currencies including the GBP.

This could be a factor but this isn't the only reason . As increase in Defence budget and value of dollar coming down together something is behind the curtain for sure maybe deferred payment of oil .

 

[VCheng]

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This could be a factor but this isn't the only reason . As increase in Defence budget and value of dollar coming down together something is behind the curtain for sure maybe deferred payment of oil .

So what happens when the deferred payments becomes due?

 

[S.Bukhari]

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So what happens when the deferred payments becomes due?

Till then you have time to improve GDP to tax ratio convert all your thermal power plants to coal in 3 years time neelam Jhelum , tarbela , Nandi pur , will be completed and GSP + would give 1.5-2 billion USD extra and sales of of 3G and 4G will also provide some relief also if Chinese investment come into place so the economy will be on track.

 

[VCheng]

Till then you have time to improve GDP to tax ratio convert all your thermal power plants to coal in 3 years time neelam Jhelum , tarbela , Nandi pur , will be completed and GSP + would give 1.5-2 billion USD extra and sales of of 3G and 4G will also provide some relief also if Chinese investment come into place so the economy will be on track.

We have had decades to complete any of these projects. What makes you think we will get going all of a sudden now? Not likely.

 

[S.Bukhari]

We have had decades to complete any of these projects. What makes you think we will get going all of a sudden now? Not likely.

Sharif brothers have good record of completing projects let's hope for the best if they do that what they are planing our economy will grow like it did in 60's.

 

[maxpayne]

VCheng is right, lets wait for few weeks and see how $ floats. Actually till now no payments are deferred and still our reserves are higher. If we get 6 months shadow, we can go even higher. Pak got a good chance with Ukraine standoff to burst the artificial bubble created by investors(local, international and exporters) and it is down.
Is it possible to maintain the falling $ by buyying by SBP? Will help raise more reserves? Any expert?