State Bank of Pakistan increases interest rates to 12.25%. Shift saving to Pakistan and get more

[BHarwana]

no it did not but we desperately need new industries, businesses and jobs

No one is making new industry business and jobs with low rates. They are buying dollar and making money off the govt. We need to break this cycle. Growth based loans can be given using govt subsidy.

Just like PMLN agriculture loans.

Why would I start business if I can make profit by buying dollar? Now high interest rate I cannot make profit from dollar so I will only take loan to invest in business.

 

[prashantazazel]

The projected exchange rate in 1 year's time is 166 wrt the USD. So saving in USD gives you almost 13 percent. I don't see a benefit for anyone in holding his savings /wealth in PKR.
If your exports increase significantly by that time, you may settle for a while near that number.

Even a honest leader will need at least a couple of years to rectify your problems. So I would expect significant depreciation of pkr for the coming 2-3 years.

 

[Clutch]

What a stupid Analogy. And you call yourself a Tomato economist, huh??

Mark my words, with this increase in interest rate on deposits, the interest given out by the banks especially housing loan rates will also go up.

Above all it sounds like banks in Pakistan are facing a serious liquidity issue I guess. One on the main reason SBP is forced to increase the rates despite the nation going through difficult economic situation. Wait for few days and the clear picture will be out soon.

I agree with this assessment.

High interest rates are never a good thing. In a normal economy, it prevents money from being circulated.

 

[BHarwana]

I agree with this assessment.

High interest rates are never a good thing.

But low interest rates in Pakistan are not helping economy but people are buying dollar and making money off it and paying back loans. If interest rates are higher than dollar predicted appreciation price that will help economy and crub inflation.

 

[ziaulislam]

But low interest rates in Pakistan are not helping economy but people are buying dollar and making money off it and paying back loans. If interest rates are higher than dollar predicted appreciation price that will help economy and crub inflation.

the reason why people put their money in UAE rather than pakistan..
ideally interest rates should be 8-10%, rupee devaluation 2-3%/year and inflation 6-7%..but we did is dropped our infaltion and interest so low that our savings went down from 20% to 10%..that is additional 30b $ of investment going down the drain..

for reference bangladesh savings are at 30%

 

[B.K.N]

The projected exchange rate in 1 year's time is 166 wrt the USD. So saving in USD gives you almost 13 percent. I don't see a benefit for anyone in holding his savings /wealth in PKR.
If your exports increase significantly by that time, you may settle for a while near that number.

Even a honest leader will need at least a couple of years to rectify your problems. So I would expect significant depreciation of pkr for the coming 2-3 years.

He is saying with higher interest rate people would not invest in dollar and it would decrease dollars value

 

[RIP Pak LAW]

With this Imran Khan so called 5 million homes project is virtually doomed.

 

[prashantazazel]

That's the likely intention behind the rate hike(12.5%).
But projected gains for the dollar(13%,due to depreciation of PKR) are similar, so now it largely depends upon the people.
Those who care about the health of the PKR, will not buy USD(talking about savings, nor investment or industry).
Those who care about preserving wealth, will keep buying USD.

Finally, it depends upon the industrial output and exports in the long term.

 

[BHarwana]

With this Imran Khan so called 5 million homes project is virtually doomed.

With this zardari and Sharif dollar investment is doomed.

 

[RIP Pak LAW]

With this zardari and Sharif dollar investment is doomed.

Dollar may remain a bit in control but there are other domains which will get a hit. Your whole assessment is restricted to dollar only.

 

[BHarwana]

That's the likely intention behind the rate hike(12.5%).
But projected gains for the dollar(13%,due to depreciation of PKR) are similar, so now it largely depends upon the people.
Those who care about the health of the PKR, will not buy USD(talking about savings, nor investment or industry).
Those who care about preserving wealth, will keep buying USD.

Finally, it depends upon the industrial output and exports in the long term.

How is dollar gain 13%

Dollar price is 149 as of today and 13% gain means it should be 167 which dollar cannot achieve before you need to pay loans so how my friend?

 

[B.K.N]

That's the likely intention behind the rate hike(12.5%).
But projected gains for the dollar(13%,due to depreciation of PKR) are similar, so now it largely depends upon the people.
Those who care about the health of the PKR, will not buy USD(talking about savings, nor investment or industry).
Those who care about preserving wealth, will keep buying USD.

Finally, it depends upon the industrial output and exports in the long term.

Most people would not buy dollar as there would be risk of decrease in dollar price

 

[BHarwana]

Dollar may remain a bit in control but there are other domains which will get a hit. Your whole assessment is restricted to dollar only.

Because I know people take loans and invest in dollar. Why would anyone invest in business if they make money by dollar and pay off loans with dollar inflation profits? Low interest rates were helping dollar mafia and no one else. High interest will restrict stocking of other commodities and reduce inflation. Plus people can now plan better for retirement as well.

These are your current foreign reserves growth in this figure is more important than your economic growth.

https://twitter.com/x/status/1129236491157352449

 

[ziaulislam]

Dollar may remain a bit in control but there are other domains which will get a hit. Your whole assessment is restricted to dollar only.

13% interest is too high
but a bigger problem is lack of capital to begin with

for investors..13% interest rate is way better than having no capital what so ever!

 

[prashantazazel]

How is dollar gain 13%

Dollar price is 149 as of today and 13% gain means it should be 167 which dollar cannot achieve before you need to pay loans so how my friend?

I thought it was 146 currently.
Projected prices are forecasts, and mayn't come true. You can look up the various sites that deal with projected values.
I found the projections to be at roughly 166 by year end.

You can look it up, or I can post links.