US dollar reaches Rs160 in interbank market

[Nilgiri]

The drastic fall of PKR must be creating lots of issue with common man.
Given that lot of things consumed by locals is imported, the businessman must be having hard time to keep up sales price with changing dollar value as well as keeping up the trust of consumer.

Similarly the consumers budget must be getting very high hit...salaries wont change as per changes in $$ exchange rates nor does it would cope up with inflation in realtime. Hard time indeed, how the mass handles this economic shock will define which way Pakistan is heading.

Heart goes with all the pakistani citizens, may this hard time gets over at earliest and may there be peace and happiness in life.

Not every country is the same. In the end it depends on how sensitive/reliant/elastic Pakistan is on imports and loans compared to its export/remittance capability to pay for them. This will all show up in data later. It really cannot be understood too well by reading people saying all different things on a forum (or even online journalists/experts) to make some monolith narrative or somewhat artificial debate etc of theirs. The reality bears out from million times more people and processes and interactions in a large macro-goo.

Time is thus the ultimate great sunshine bleach and disinfectant for all these opinions in here.

From what we have seen thus far, Pakistan definitely seems to be on average more sensitive to the net effect caused by import/loans compared to what it can pay its way by (i.e it cannot substitute that quick or easily locally or with cheaper means). Thus the penalty by bad decision and structure that perpetuated it is coming through. But how it changes and the exact intermediate and longer term effect, we will have to see.

Large population countries after all respond like large diesel engines....as opposed to a spritey small gasoline one.

True but establishment doesn't have any solutions to economic mess either. Last time when Musharraf took over, country was in similar shape (nearly bankrupt) by the same PPP / PMLN. Only 9/11 saved it. Debt to GDP back then was nearly 88 percent.

Blaming pakistan political parties/dictators/leaders is only getting to the middle layer of the problem at best. There is something underneath all of that....that is a more systemic, core, consistent basis for the basic underlying problem (given its disproportionate control and influence over general movers, shakers and elites in Pakistan). Till Pakistan grapples with that sincerely, all this debate with political parties corruption etc is somewhat an eyewash.

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

Well more crucial is just how elastic/inelastic those are (especially the most relevant ones to some argument of social wellbeing etc) to price changes/shifts.

 

[nahtanbob]

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

cheaper exports is a bad thing unless total amount of exports increases

 

[HAIDER]

Dollar will fly low after June 30th , lots of analyst believe PTI adopted this strategy to encourage people to let the dollar out of there vaults. After June 30th FBR will be all out war.

 

[ejaz007]

Dollar at 162 against PKR.

Dollar will fly low after June 30th , lots of analyst believe PTI adopted this strategy to encourage people to let the dollar out of there vaults. After June 30th FBR will be all out war.

How shall FBR be all out war? Has any of PTI's strategies adopted so far worked.

The dollar shall touch 180.

 

[Śakra]

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

Lol you have nothing to export. Even your own people don’t want local products.

 

[I.R.A]

The drastic fall of PKR must be creating lots of issue with common man.
Given that lot of things consumed by locals is imported,

No it doesn't and it shouldn't. And no lot of things consumed are imported.

The only price hike can be in fuel / gasoline and power, auto and defense. Rest Pakistan is capable of producing its own milk, poultry, meat, vegetables, wheat, sugar, cooking oils and fruits etc. This government can help better the situation only if it is able to bring in a strict price control mechanism and shift as soon as possible to direct taxation.

 

[Viny]

No it doesn't and it shouldn't. And no lot of things consumed are imported.

The only price hike can be in fuel / gasoline and power, auto and defense. Rest Pakistan is capable of producing its own milk, poultry, meat, vegetables, wheat, sugar, cooking oils and fruits etc. This government can help better the situation only if it is able to bring in a strict price control mechanism and shift as soon as possible to direct taxation.

Once there is fuel price hike, it means the transportation cost is increased and that would directly result into rise of all the basic items that are transported from one place to another. Secondly the cost of doing business goes high, for example computers are not very basic requirement of doing any decent size business, the cost of same going up by 60-80% dents the adoption of technology. Pakistan heavily imports machinery for industrial purpose with cost going almost double for capital investments, the production cost will ultimately get hit as well as upgradtion of technology will be limited.

Govt would need to push the industries where there is low capital investment and high export chances, it can be human skill industries like IT Solutions, Financial Solutions or offering low cost work force for international projects.
This can be achieved by giving tax incentives to these industries. Govt might not earn direct taxes from them for next decade, but they will help in indirect taxes as well as kick starting the domestic consumption based economy.

 

[I.R.A]

Once there is fuel price hike, it means the transportation cost is increased and that would directly result into rise of all the basic items that are transported from one place to another. Secondly the cost of doing business goes high, for example computers are not very basic requirement of doing any decent size business, the cost of same going up by 60-80% dents the adoption of technology. Pakistan heavily imports machinery for industrial purpose with cost going almost double for capital investments, the production cost will ultimately get hit as well as upgradtion of technology will be limited.

The dollar hike is not happening in isolation. Wait for some period, a lot will change inside Pakistan, the lifestyle, the thinking, the mentality .... Whether Pakistan and Pakistanis wanted these changes or not ....... but these changes had to come, be it IK, Zardari or NS at helm. When people before elections were chanting Tabdeeli Tabdeeli, I had said on this very forum "Sab say phelay yehi log cheekain mary gay". People can leave Pakistan if they don't wish to go thru this, but eventually everyone in Pakistan will have to pay his fair share of taxes. It was matter of time the substantial undocumented economy has enjoyed a very long period of tax evasion ...... however now it won't be able to find any rescue. In my opinion its first going to collapse and then stabilize and emerge again, and I being a Pakistani won't mind that at all. The only problem I had with this government's approach is ....... they are doing it in haste, it could have been swift gradual transition without losing the confidence of awam. But anyhow .....

Your initial opinion was based solely on dollar hike and it's impact on common man ... you seemed to have ignored many other dynamics. Now that this government has done it in haste I won't mind if they start demonetization as well .......

 

[Arsalan]

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.

As explained earlier, the irregularlities are mainly because of the fact that it was anchored down previously and kept at 140Rs for a dollar when real value was in the 160s. Now that free floating is allowed it is going up toward that real value fluctuating up and down at times. Will steady once its there and then in 5 - 6 months i see it coming down gradually, under free float, to 140/150 mark

 

[I.R.A]

Dollar just touched 164. Now i am panicking. Massive inflation in coming days. These are just excuses that we're letting it free float. Some influential people are making a fortune out of this.
People who say it'll come down to 150 after 30th june should get a mental evaluation and come out of this reverie.

It will go to 200. Now it's up to you if you wish to panic or wait and see what unfolds.

 

[HammerHead081]

Depreciation of rupee doesn't helps us anyway in terms of export. We don't have any industry to take advantage of this garbage valued currency. Most of our industry shifted to Bangladesh. It's going to take decades for our industries to set up and take advantage of this currency situation. Till then we are doomed. Run out of this country if you can, if you don't have a business and belong to salaried class. This government is after middle and salaried class like vile dogs because it's easy to get money out of us.

 

[Sine Nomine]

I hold the opinion that we should not go to IMF just like it was promised before uturn was taken on suicide pact.

Once a great great Leader said:-
Jub Dollar barhey tou Samjh jana kai PM corrupt hai.

 

[El Sidd]

Once a great great Leader said:-
Jub Dollar barhey tou Samjh jana kai PM corrupt hai.

I never heard any Pakistani politician say that. You are just making things up

 

[shah_123]

Dollar just touched 164. Now i am panicking. Massive inflation in coming days. These are just excuses that we're letting it free float. Some influential people are making a fortune out of this.
People who say it'll come down to 150 after 30th june should get a mental evaluation and come out of this reverie.

Dollar just touched 164. Now i am panicking. Massive inflation in coming days. These are just excuses that we're letting it free float. Some influential people are making a fortune out of this.
People who say it'll come down to 150 after 30th june should get a mental evaluation and come out of this reverie.

This dancing of dollar up & down ain't good, we need stability. --- fluctuation of dollar isn't good for business ---

It will go to 200. Now it's up to you if you wish to panic or wait and see what unfolds.

means Aap ney Ghabrana nahi Hai.

Multiple times gas/electricity rates increased, this Govt is worse than sharif donkeys and Zardari pigs.

 

[I.R.A]

means Aap ney Ghabrana nahi Hai.

Multiple times gas/electricity rates increased, this Govt is worse than sharif donkeys and Zardari pigs.

Actually it is good that they are pitched against each other, there was no other way to get rid of their hold. So whatever and whoever benefits in this government ....... the next one will make sure that they pay it with interest. Gabrana nai hy thora arsa lagay ga par yeh kachra ub khud he aik doosray ko khatam kary ga.