Understanding Foreign Exchange , Why Rupee vs Dollar price is impacted

[AZADPAKISTAN2009]

A very informative video about how foreign exchange work

Pakistan has a none floating , exchange rate in order to prevent sudden increase or decrease in value. In order to maintain the currency rates , Country maintains a Dollar Reserve in State Bank of Pakistan the dollars stored or release impact the value of the Local Current vs Dollar rate


Based on the video , Pakistanis are seeking to attain more Dollars and it is forcing Pakistan state bank to release their reserves , forcing the Rupee value to fall

The question to ask for Pakistani Authorities or ISI (Secret Service) should be what triggered such a massive demand for Dollar ? Who purchased so much dollar which caused a shortage in market ?


Perhaps an inquiry is due at Bank Level , which Bank demanded a sudden influx of Dollar and track down the individual or individuals , who have account at the Bank and ask them what is their nature of Business and what exactly did they buy ????

Drop of 11 rupee at once is Abnormal !!!


Did bunch of Pakistanis buy a Aircraft Carrier , for 9 billion dollar that their bank demanded 9 Bilion Dollar from State bank of Pakistan which resulted in 11 rupee drop ? ​

 

[mastaan]

or the demand/acceptance of pakistani rupee is so less that even in case of small demand for dollars, the market gets spiked up or down violently. Shallow markets - lots of examples in South East Asia and Africa have that as a common feature.

 

[AZADPAKISTAN2009]

If there are criminal elements involved their criminal activities would be conducted from 1-2 Banks, where they may have friends at higher posts who helped them move such a massive amount of Dollar out of country


What could Trigger 11 billion dollars going out of economy enough to force a 11 rupee fall ?


a) May be Pakistanis taking small dollar amount 2,000 Dollar for Rupee to go on Vacation?
b) May be Nawaz Sharif moving his assets out of Pakistan?
c) May be PPP moved their funds out of Pakistan ? Could be
d) Did government of Pakistan , bought an Aircraft Carrier , sure did not ?
e) Did a private Business in Pakistan buy a foreign company worth 5-10 billion dollar ?
f) Did a Bank wanted to close down so they replaced all their rupee with dollar ?

 

[Gorgin Khan]

The question to ask for Pakistani Authorities or ISI (Secret Service) should be what triggered such a massive demand for Dollar ? Who purchased so much dollar which caused a shortage in market ?

Perhaps an inquiry is due at Bank Level , which Bank demanded a sudden influx of Dollar and track down the individual or individuals , who have account at the Bank and ask them what is their nature of Business and what exactly did they buy ????

If its done for the past few decades indiscriminately, I think all the culprits will come out ... But its just a dream, which unfortunately will remain a dream ..

We will never find the culprits , They are too big for this whole system...

 

[AZADPAKISTAN2009]

If it is a crime Syndicate , then their influence will be in 1-2 Banks only that is one way to capture the people causing the sharp changes in prices

If it is really small Pakistani citizens buying 100 dollar -1,000 dollar for no apparent reason it would be shocking but acceptable but then the demand for Dollar would be spread across all Local Banks of Pakistan

If it is a crook political party like PML or PPP , or Nawaz sharif moving his money out while he is away from Jail on a bail , again the impact would be 1-2 banks who are in alliance with these parties against state of Pakistan

It would not be difficult for Pakistan State bank to determine which back demanded the most dollars

1. Al Baraka Bank (Pakistan) Limitted.
2. Allied Bank Limited.
3. Askari Bank Limited.
4. Bank Alfalah Limited.
5. Bank Al-Habib Limited.
6. BankIslami Pakistan Limited.
7. Citi Bank N.A.
8. Deutsche Bank A.G.
9. The Bank of Tokyo-Mitsubishi UFJ
10. Dubai Islamic Bank Pakistan Limited.
11. Faysal Bank Limited.
12. First Women Bank Limited.
13. Finca Microfinace Bank Limited
14. Habib Bank Limited.
15. Standard Chartered Bank (Pakistan) Limited. Culprit????
16. Habib Metropolitan Bank Limited.
17. Industrial and Commercial Bank of China
18. Industrial Development Bank of Pakistan
19. JS Bank Limited.
20. MCB Bank Limited.
21. MCB Islamic Bank Limited.
22. Meezan Bank Limited.
23. National Bank of Pakistan
24. S.M.E. Bank Limited.
25. Samba Bank Limited.
26. Silk Bank Limited
27. Sindh Bank Limited.
28. Soneri Bank Limited.
29. Summit Bank Limited.
30. The Bank of Khyber.
31. The Bank of Punjab.
32. The Punjab Provincial Cooperative Bank Limited.
33. United Bank Limited.
34. Zarai Taraqiati Bank Limited.

Who is requesting the most Dollars ????

I already mentioned before Standard Charter is sending Pakistanis overseas letters scaring them about duel Tax , and many Pakistanis are moving their funds out of Pakistan due to these letters, they are scaring Pakistanis who keep their money in Pakistan basically with these letters , I am not sure what is happening in other Local banks

Instead of thanking overseas Pakistanis for keeping their saving in Pakistan they send out letters asking why are you keeping your savings in Pakistan when you live overseas

On one hand I see Government of Pakistan start , Pakistan Banao Certificates and then I see idiots in Standard charter bank who send out letters to Pakistani overseas

 

[Gorgin Khan]

If there are criminal elements involved their criminal activities would be conducted from 1-2 Banks, where they may have friends at higher posts who helped them move such a massive amount of Dollar out of country


What could Trigger 11 billion dollars going out of economy enough to force a 11 rupee fall ?


a) May be Pakistanis taking small dollar amount 2,000 Dollar for Rupee to go on Vacation?
b) May be Nawaz Sharif moving his assets out of Pakistan?
c) May be PPP moved their funds out of Pakistan ? Could be
d) Did government of Pakistan , bought an Aircraft Carrier , sure did not ?
e) Did a private Business in Pakistan buy a foreign company worth 5-10 billion dollar ?
f) Did a Bank wanted to close down so they replaced all their rupee with dollar ?

+
Or maybe the preconditions for the IMF loan are already being fulfilled ,its also close to 12 billion dollars?

 

[AZADPAKISTAN2009]

In any case the drop is Abnormal and shows a problem in System as it takes about 1 Billion dollar to move hands before 1 rupee difference is introduced

Perhap once way to counter the problem is when Pakistani Traders sell anything

a) Wheat
b) Sugar
c) Fruits
d) Vegetables
e) Rice

Pakistanis Traders should accept only Dollar for the trade and save that fund in Local Pakistani Bank accounts in a Dollar Account

The problem it seems that Traders have Pakistani Rupee account when they panic they end up selling Ruppes and Jump on Dollar Wagon


Release of Nawaz Sharif may have trigged anxiety amount Currency traders who may have seen that as a sign of trouble to come if Nawaz Sharif is out of Jail

 

[CrazyZ]

The main lesson here is the Forex reserves were too low or we should allow a free floating currency. There is a zillion reasons for the surge in dollar demand. The profit motive is clear. Forex traders that that bought dollars 120pkr are gonna make a nice 25% profit after the IMF bailout. Great returns in a short time frame. You can stop people from trying to make profit. Don't politicize reality.

Instead of fighting the profit motive, you need to use it yo your advantage. Exporters can benefit from this, importers will be hurt. Too many merchants in Pakistan want to make a easy money by importing from abroad and reselling in local markets....They should be taxed the hardest. The revenue can go to help exporters who should benefit from a weak currency.

 

[AZADPAKISTAN2009]

State Bank is only under pressure because Traders convert their Rupee suddenly into Dollar causing a massive strain on State Bank Reserves


What you suggested is a group of Traders , Hoarded the Dollar in their Homes / Business
or some form of saving when Rupee was 120 Rupee for 1 Dollar.

They Hoarded , of held the currency in their possessions without actually doing anything with it , hoping their would be shortage of Dollar in market. When the shortage did materialized then they can sell the Dollar for 142 rupees and make more money. For me it sounds like Anti State activities to devalue Pakistan's currency and hurt Pakistan State bank

Normally such a planned , coordinated Hoardings is illegal in many countries weather if it is for stocks or currency but anything that manipulates the market artificially is a crime


In Last few months , the two time market crashed was both time Nawaz Sharif was released from prison

a) Once he was released for few weeks and then market crashed then he went back in Jail
b) 2 Days ago he was released for few weeks for unknown reason and market crashed again



Lets Assume if Traders are Hoarding Dollar , since it was selling for 120 rupees for dollar , where were they saving the Dollars ? At Banks? At their garage ? At their Homes?

 

[AZ1]

If it is a crime Syndicate , then their influence will be in 1-2 Banks only that is one way to capture the people causing the sharp changes in prices

If it is really small Pakistani citizens buying 100 dollar -1,000 dollar for no apparent reason it would be shocking but acceptable but then the demand for Dollar would be spread across all Local Banks of Pakistan

If it is a crook political party like PML or PPP , or Nawaz sharif moving his money out while he is away from Jail on a bail , again the impact would be 1-2 banks who are in alliance with these parties against state of Pakistan

It would not be difficult for Pakistan State bank to determine which back demanded the most dollars

1. Al Baraka Bank (Pakistan) Limitted.
2. Allied Bank Limited.
3. Askari Bank Limited.
4. Bank Alfalah Limited.
5. Bank Al-Habib Limited.
6. BankIslami Pakistan Limited.
7. Citi Bank N.A.
8. Deutsche Bank A.G.
9. The Bank of Tokyo-Mitsubishi UFJ
10. Dubai Islamic Bank Pakistan Limited.
11. Faysal Bank Limited.
12. First Women Bank Limited.
13. Finca Microfinace Bank Limited
14. Habib Bank Limited.
15. Standard Chartered Bank (Pakistan) Limited. Culprit????
16. Habib Metropolitan Bank Limited.
17. Industrial and Commercial Bank of China
18. Industrial Development Bank of Pakistan
19. JS Bank Limited.
20. MCB Bank Limited.
21. MCB Islamic Bank Limited.
22. Meezan Bank Limited.
23. National Bank of Pakistan
24. S.M.E. Bank Limited.
25. Samba Bank Limited.
26. Silk Bank Limited
27. Sindh Bank Limited.
28. Soneri Bank Limited.
29. Summit Bank Limited.
30. The Bank of Khyber.
31. The Bank of Punjab.
32. The Punjab Provincial Cooperative Bank Limited.
33. United Bank Limited.
34. Zarai Taraqiati Bank Limited.

Who is requesting the most Dollars ????

I already mentioned before Standard Charter is sending Pakistanis overseas letters scaring them about duel Tax , and many Pakistanis are moving their funds out of Pakistan due to these letters, they are scaring Pakistanis who keep their money in Pakistan basically with these letters , I am not sure what is happening in other Local banks

Instead of thanking overseas Pakistanis for keeping their saving in Pakistan they send out letters asking why are you keeping your savings in Pakistan when you live overseas

On one hand I see Government of Pakistan start , Pakistan Banao Certificates and then I see idiots in Standard charter bank who send out letters to Pakistani overseas

You need to complain using PTI portal about this for sure. May be one reason could be FATF ?

 

[ajpirzada]

these are called speculative attacks.... they happen at the time when market believes that the government cannot or will not defend the value of currency at the current rate...

this can happen because of government accepting to IMF terms... or the state bank showing its willingness to let rupee devalue... or the government running out of reserves to defend the currency...

all these reasons were at play when this happened...

economic research has long talked about what causes sharp/sudden fluctuations in the value of currency...

 

[AZADPAKISTAN2009]

I am not familiar with Pakistan's Policy on allowing citizens to open Dollar Currency accounts
the problem would be less severe if they allowed the citizens to open Dollar currency local accounts it would actually result in bigger reserve for dollar inside Pakistan over time

In such cases when such traders would need to buy Farming Goods from inside Pakistan they would be forced to convert their Dollar to Pakistani Dollar , and sell dollar back to State Bank so they can buy from local farms


***My Assumption is not all Pakistani Banks allow Pakistanis to open US dollar accounts, allowing them to keep their saving in US dollar will ensure the Local reserves for Dollar Rise inside Pakistan


Specially for Import/Export folks , they should be given Option to Bring their money in $$ and save it in Local Pakistani Account and only convert it when buying from local farms

Seems like Pakistanis are able to open foreign currency accounts
Snap from one of bank's offering

 

[TheNoob]

We are all responsible.
Our spoiled awam is.


Also, Azad bhai.
Why are you so good at explaining your point?
You have one of those really highly detailed threads dictating your opinion and with facts!

Please live a longer life on the forum and in real life.

 

[blueazure]

gold , bullets, and bitcoin

only 'currencies' of future