US dollar reaches Rs160 in interbank market

[Kabira]

This is good for Pakistan. It means expensive imports and cheaper exports.

 

[WarKa DaNG]

Aik ghobara bhi itni jaldi se upar nahi jata jitna dollar upar chalagya

 

[VCheng]

Aik ghobara bhi itni jaldi se upar nahi jata jitna dollar upar chalagya

Have you never played with balloon "rockets"? Quite fast, as long as the air lasts.

 

[nahtanbob]

By the end of this year Rupee will definitely be 200 to a dollar.............

what is the point of devaluation if the exports are not going to rise ?

 

[Reddington]

what is the point of devaluation if the exports are not going to rise ?

Exports rise by having industries, manufacturing. Apart from exporting textile products (btw most of our textile industries have shifted to Bangladesh) there is nothing worth exporting. The rest of our exports are raw materials and agriculture related etc.

 

[nahtanbob]

Exports rise by having industries, manufacturing. Apart from exporting textile products (btw most of our textile industries have shifted to Bangladesh) there is nothing worth exporting. The rest of our exports are raw materials and agriculture related etc.

my initial observation is devaluation does not really help here. I see some devaluation to get the clowns from the IMF off your back. this seems to be getting out of hand

 

[Baburfromsarmarkand]

If it falls lower we can export our cars bikes and locally manufactured tractors. We may be able to sell cheaper than China and Japan. I hope one day Pakistani big 3 auto will export to China Japan etc

 

[El Sidd]

If it falls lower we can export our cars bikes and locally manufactured tractors. We may be able to sell cheaper than China and Japan. I hope one day Pakistani big 3 auto will export to China Japan etc

yes we can sell our agricultural products like Brahma Bull semen at competitive prices now

 

[Norwegian]

what is the point of devaluation if the exports are not going to rise ?

Devaluation isn't done for fun. It is an automatic process when imports increase against exports.

 

[Abdussamad]

Government is banning prize bonds so that's another reason for this dollarization. Prize bonds are bearer bonds which attract a lot of black money. Government has demanded owners of Rs. 40k bonds to get themselves registered. Soon it'll go after other denominations too. All this under FATF pressure. So what will the people with these bonds do? Will they hold on to them? No they are cashing out and switching their money over to dollars!

 

[nahtanbob]

Devaluation isn't done for fun. It is an automatic process when imports increase against exports.

when your imports rise against exports the currency is likely to be devalued
it is sad that devaluation is the only weapon to reduce exports

 

[Norwegian]

when your imports rise against exports the currency is likely to be devalued
it is sad that devaluation is the only weapon to reduce exports

No to reduce imports not exports.

 

[nahtanbob]

No to reduce imports not exports.

oops the typo was mine

 

[Nilgiri]

Its free floating, this is confirmed. It was anchored down previously so the conversation rate was not realistic in past. It had to go up even if US$ was losing against other currencies. The increase is also gradual in nature. Not very smooth because of all the open market dealings and some panic buying/selling but it is gradual still

Tbh, it doesnt look very free floating to me...just partially (though could be the effect from the low liquidity volume at play)....too many neat rectangles:

https://www.xe.com/currencycharts/?from=USD&to=PKR&view=1M

Compare the structure (esp resolution of movements) in the last month to any other free floating exchange rate (say USD-CAD-EUR-JPY). Though its definitely less strict peg range for PKR than before (When it was tight line).

I think Pakistan central bank/govt is still in transition mode to get the overall level gradually to a more realistic overall vicinity with the USD to achieve policy goals in the short and mid term.

Then they will allow for greater free float sensitivity provided there is enough bulk liquidity inertia to do so and overall net advantage in doing so.

Yes, and so? Government can just print more RS which will lead to inflation.

Printing more rupees (to pay off higher debt) wont help. Simply the inflation rate from that will get transmitted to the exchange rate too (since you now have more PKR chasing the same import/loan demand from abroad).

You have to put positive energy to get positive structural results in the end. Simply increasing supply of something (with no net positive work put in) will do zilch.

The exceptions are massive wealth countries like the US (when we look into for example how its fed and govt debt goes), because they have the earned intrinsic credibility/basis from everyone else due to inertia, history, emperor new clothes complex, vast private wealth stockpiles and various other things at play.

But Pakistan is nowhere near that kind of status to have that at hand....its a mediocre developing country.

 

[POPEYE-Sailor]

إِنَّا إِنَّا لِلّهِ وَإِنَّـا إِلَيْهِ رَاجِعُونَ