Rupee hits one-year low against dollar

[ziaulislam]

Rupee hits one-year low against dollar
Shahid IqbalPublished September 3, 2021 - Updated about 8 hours ago
Facebook Count
Twitter Share
32

Irfan Khan

KARACHI: Uncertainty continued in exchange rate markets on Thursday where buyers and sellers were found asking each other about the limit of appreciation of the US dollar, which has risen by 10.5 per cent against the rupee in the last four months touching one-year high.
Currency dealers, experts and analysts have many reasons for the steep fall in the local currency value against the US dollar, but they said there was no intervention from the State Bank of Pakistan (SBP) to stop this devaluation to bring stability.
In the interbank market the US dollar’s closing rate as provided by the SBP was about Rs167 while bankers said the price remained higher during the session.
Bankers and currency dealers were trying to understand why the rupee has been falling against the US dollar since May as the country’s foreign exchange reserves have grown rapidly with State Bank of Pakistan’s holdings soaring to an all-time high.

“It may be the widening trade deficit or fear of higher current account deficit in FY22 and increased requirement of US dollars for debt servicing, but right now the exchange rate is not stable,” said a currency dealer in the interbank market.
He said nobody can ascertain the limit of devaluation of the rupee which is alarming as the inflow of high cost of imported goods is creating inflation.
The SBP remains silent over the recent steep fall of the local currency.
SBP Governor Dr Reza Baqir during the presentation of monetary policy last month made it clear that the current account deficit would be higher than FY21. He said the deficit would be in the range of 2 to 3pc and the exchange rate would respond this deficit in the form of appreciation of US dollar. He also did not identify the limit of devaluation of local currency or the point of stability of exchange rate.
The dollar touched it’s lowest against the rupee on May 9 when it was traded at Rs151.17. Since then it started moving upward and reached Rs167 on Thursday, just close to the highest price of Rs168.2 in August 2020.
“We are not able to judge where the limit of this devaluation of local currency is, but there are concerns among the stakeholders about this strange exchange rate stability,” said a senior banker.
Currency dealers in the open market were also unable to find the end point of this devaluation despite very low turnout in their market.
The demand in open market is still very low but the dollar got higher price as it was traded at Rs167.80.
The trade deficit widened by 133pc to $4.05bn in August reflecting mounting pressure on exchange rate due to higher demand for dollars from the importers.
Published in Dawn, September 3rd, 2021

@Desprado @Patriot forever @Zibago @ziaulislam @Del @Dual Wielder

@Patriot forever @Zibago @ziaulislam @Del @Dual Wielder

Remember reserve sole purpose is to save from speculation attack and save from crisis but to not become a major cause of crisis. That is why now since September start PTI is catch 22 phase and it will only get worse for them because the Policy they are applying will not fail but it will also takes back to 2019 where tried to avoid crisis. So people are already tried of facing the highest inflation in Asia, which is Pakistan since 2 years.

Ofcourse when rupee goes from 110 to 170 you would expct high inflation

However the current run of inflation is GLOBAL USA had 6% inflation..

You are running around in circles now, and not making sense at this point.

Overall CAD even for this month will be lower than 2018 where plmn left us that too with fixed currency. I do think we need to pull back CAD and find a way to navigate through this international inflationary cycle.

There is no state Bank intervention you are again blabbering commercial debt, our reserves are at an all time high you are again and again saying if we had reserves we could have growth. Stop with the nuisance.
Take a break and relax.

CAD should be 1-2%..its still far below then 2%

 

[Desprado]

Ofcourse when rupee goes from 110 to 170 you would expct high inflation

However the current run of inflation is GLOBAL USA had 6% inflation..

CAD should be 1-2%..its still far below then 2%

Shaukat Tarin said in Budget speech that our CAD will be at 0.7 of GDP. You can watch is youtube video that he said it will be only 2.5 billion dollar this FY. He achieve his target in just 2 months.

Budget 2021-22: Government targets 4.8% growth in 'people-friendly' budget

Minister for Finance Shaukat Tarin presents PTI government's third budget.Govt sets growth target at 4.8%; total outlay of budget Rs8,478 billion.Opposition puts up...

www.geo.tv

 

[TheDarkKnight]

Shaukat Tarin said in Budget speech that our CAD will be at 0.7 of GDP. You can watch is youtube video that he said it will be only 2.5 billion dollar this FY. He achieve his target in just 2 months.

Budget 2021-22: Government targets 4.8% growth in 'people-friendly' budget

Minister for Finance Shaukat Tarin presents PTI government's third budget.Govt sets growth target at 4.8%; total outlay of budget Rs8,478 billion.Opposition puts up...

www.geo.tv

How in two months? You probably are confusing trade deficit with CAD.

 

[H!TchHiker]

Keep dollar ...rupee will devalue more in coming time ...

 

[Vanamali]

i hate rupee i love euro

It's human nature to love what they don't have..

 

[Maula Jatt]

I mean I always take him with a pinch of salt as he is a bit pro-PTI but his message seems to be don't worry, look at the big picture
don't do stupid stuff for short term gain- as in jo dar gaya, woh mar gaya

 

[Desprado]

Ofcourse when rupee goes from 110 to 170 you would expct high inflation

However the current run of inflation is GLOBAL USA had 6% inflation..

CAD should be 1-2%..its still far below then 2%

Exactly that is purpose of Market base currency to reduce CAD not make it into a

How in two months? You probably are confusing trade deficit with CAD.

Bhai 4.1 billion trade deficit- 2.5 billion dollar remittance. We are about to witness the highest import service bill ,which will come 23rd -26th of this month. So it more than 1.5 billion CAD alone this month combining 775 million dollar CAD last month so he already over achievement his target.

I mean I always take him with a pinch of salt as he is a bit pro-PTI but his message seems to be don't worry, look at the big picture

He is talking useless. if this is case than Pakistan export should increase because he is saying that everything is getting expensive but it is not case at all. We are facing devaluation without reducing imports, no increase in export and no CAD reduction. And the Lollipop that he is giving that were giving that we are saving reserve is going fall on flat face because Shaukat Tarin has already taken 2.5 billion dollar commercial loan in 2 months for only to fill CAD gaps so we are going for another BOP crisis. We adding debts to pay CAD and we do not have any printing machine for making dollar in Pakistan.

Just think only Pakistan currency is market based and only Pakistan is facing high commodity prices? Sri Lanka with 2.8 dollar reserve has less inflation and less crisis than us. We have wasted Pakistan 3 years on this debate and now it is over that devaluation makes more export and less import.

 

[Maula Jatt]

Keep dollar ...rupee will devalue more in coming time ...

not worth it, trust me
do something smart with your money

 

[Patriot forever]

Ofcourse when rupee goes from 110 to 170 you would expct high inflation

However the current run of inflation is GLOBAL USA had 6% inflation..

CAD should be 1-2%..its still far below then 2%

Sir this month it will be higher in July it was in the targeted range. We need to keep it in the range of 2-3%. We can not sustain this if it continues without intervention. Last year it was well below our target infact negligible.

Global inflation cycle is turning ugly, one of the major reasons why IMF increased SDR. I hope it is subdued over and does not extend to 2nd half to a point where it starts affecting our remittances.

Both OPEC+ ( with meager output restoration of cuts last last year of crude) and China (coal with the trade war with Australia) are screwing us over.

 

[Desprado]

not worth it, trust me
do something smart with your money

For you. He has worked with Hammad Azhar.

https://twitter.com/x/status/1433806424019292160

Sir this month it will be higher in July it was in the targeted range. We need to keep it in the range of 2-3%. We can not sustain this if it continues without intervention. Last year it was well below our target infact negligible.

Global inflation cycle is turning ugly, one of the major reasons why IMF increased SDR. I hope it is subdued over and does not extend to 2nd half to a point where it starts affecting our remittances.

Both OPEC+ ( with meager output restoration of cuts last last year of crude) and China (coal with the trade war with Australia) are screwing us over.

https://twitter.com/x/status/1433666811556507656

 

[Desprado]

Even GEO having laugh after a long time no wonder PTI asked for it.

"According to the statement, despite the massive currency devaluation, neither the exports increased proportionately nor the imports could be curbed, touching an alarming peak of $6.4 billion in August."

Rupee appreciates slightly against the US dollar

KARACHI: The rupee appreciated 0.04% against the US dollar in the inter-bank market on Friday, closing the week at Rs166.91.The local currency closed at a 13-month low of Rs166.98 on Thursday on the back of a surge in demand for the...

www.geo.tv

 

[HttpError]

At this pace, 200 PKR for 1 USD isn't far away. No wonder people would stock US Dollars. I myself would avoid PKR in the future. Wouldn't let these corrupt politicians get richer at our (my expense).

 

[Desprado]

At this pace, 200 PKR for 1 USD isn't far away. No wonder people would stock US Dollars. I myself would avoid PKR in the future. Wouldn't let these corrupt politicians get richer at our (my expense).

Yes that i am trying to some sense that saving reserve will cause massive problem and using reserve will cause massive as PKR is going down without cause and non purposely than people will stock dollar to be saved from Inflation and dollarization will start massively ,which alone is enough to bring PKR rate down and create a massive shortage. That what's happens when devaluation has no effect on exports, import or even CAD like Zimbabwe did.

 

[Imran Khan]

It's human nature to love what they don't have..

just look at EURO how cute its look like man 100 and 50 are so nice

 

[CriticalThought]

It is clear why rupee depreciated, it is bearing the brunt of increase in imports ( it is natural as economy accelerates demand for petrol, diesel etc is increased along with other essential raw materials etc) and without intervention from SBP our reserves are protected.

If the SBP continue with its right policy, when the inflationary cycle eases in international market rupee will gain strength (what I expect is 2H FY 21-22). In order to stop the depreciation, SBP can slow down the economy actively in a bid to reduce imports or increase duties further on some imported items ( I can hardly think of anything as there are essentially very limited luxury items which are already taxed) slowing down the economy passively.

What I don't support is increasing interest rates ( active slowdown) which imo SBP will not do, since the inflation is in range of 8.4% and demand pressure is still not there (economy is not heating up and there is still room).

The best thing to do is wait it out for the international commodity inflation cycle to slow down with calculated minimal intervention to preserve the momentum of economy.

As the article points out dollar demand is open market is low ( that means the depreciation is blunting the major impact) so any intervention would be very small just to stabilise the market not to control the movement.

And this is PTI propaganda fed to the masses. Because it completely ignores the debt we need to pay in dollars which the government is obtaining from the forex markets. This mismanagement of debt is exactly what the enemies of Pakistan want.