We stopped dollar getting as low as 50 60 - Nawaz Sharif

[FaujHistorian]

Nawaz sharif will sell the country.

HOW?

All the economic indicators (moody, WB) are going up aka positive.

 

[A.Rafay]

HOW?

All the economic indicators (moody, WB) are going up aka positive.

We should be doing better, dollar should drop more to 70-80, our industrial output is shrinking instead of increasing due to uncontrolable energy crises.

 

[FaujHistorian]

We should be doing better, dollar should drop more to 70-80, our industrial output is shrinking instead of increasing due to uncontrolable energy crises.

Agreed.

It takes around 3 years to get have large power stattions to become online.

End of 2017 looks good.

Oh BTW, major industrial states now are running 24 hours. They get priority in electricity and gas supply.

 

[gangsta_rap]

HOW?

All the economic indicators (moody, WB) are going up aka positive.

Ever since PPP and zardari came in, GDP and HDI were still positive too.

Growth and progress is perpetual in Pakistan, it just keeps happening.

But nobdy will credit zardari,ppp,pmln and nawaz for it, because they had absolutly no input. On the contrary these guys make the growth rate dip down

 

[qamar1990]

What should i say ?

actually keeping the rupee inflated like this would be better for foreign investment don't you think?

 

[FaujHistorian]

actually keeping the rupee inflated like this would be better for foreign investment don't you think?

Inflated rupee is good for exports. Terrible for imports.

so these rates should be carefully managed.

Pakistan is mostly import oriented right now.

So we are paying terrible prices due to low value of rupee.

If on the other hand we were export heavy country, then the situation will be different.

I think our goal should be around 50-70 rupees to dollar. This should be comfortable for exports and lot lower burden on common citizen.

 

[Luftwaffe]

Are you familiar with the process of exporting goods from Pakistan?

You know that dollars earned in the process come straight to our State Bank and not in the pockets of exporters.

you know this. Right?

Yes I know, for CNG station malakan in KPK, than I also know in zardari era zardari asked for % if he don't get it no exports, than there are businessmen who do not agree to state bank poking into their affairs not trusting them and ultimately they move their businesses to bangladesh, thailand and malaysia. SBP has lost its credibility from the time of ppp rule 5 years ago it can't even say a word about printing more money.

Good old article.
Central Bank independence and inflation - Blogs - DAWN.COM

 

[Viper0011.]

I remember businessmen started crying as soon as dollar went down to 96 from 107 in couple of days. 50-60 mean they will collectively suicide.

You never bring down currency dramatically. It offsets the trade balance in one party's favor, it also literally stops investments as the investor's get scared of losing money. You guys still live in the world and import a lot of stuff and are getting a lot of investments. If you scare the world off, your system might have a cheaper dollar but it'll collapse shortly after such a huge dip.
By bringing the dollar to its current level and the government officials making statements that it can go further down, you've politely warned the investors so that they have room to adjust and not collapse.
1) It sends out a message to the investment community that they should expect lesser profits BUT the market has become stronger so they should feel safer about their money
2) The country has a strong and stable government with good policies, which results in long term gains at a higher level even though short term gains may be little due to local currency's value increasing vs. the USD
3) Future loans to the country and to its projects will be issued at a cheaper rate, easily and with more funding options due to the above three.

If anyone of you follow the world economy and associated bodies, the Moody's index has already changed Pakistan's outlook from Negative to Positive (HUGE step for investments), it is primarily because of all of the above, a stronger economy, better policies, better return and a country becoming more stable.

 

[FaujHistorian]

You never bring down currency dramatically. It offsets the trade balance in one party's favor, it also literally stops investments as the investor's get scared of losing money. You guys still live in the world and import a lot of stuff and are getting a lot of investments. If you scare the world off, your system might have a cheaper dollar but it'll collapse shortly after such a huge dip.
By bringing the dollar to its current level and the government officials making statements that it can go further down, you've politely warned the investors so that they have room to adjust and not collapse.
1) It sends out a message to the investment community that they should expect lesser profits BUT the market has become stronger so they should feel safer about their money
2) The country has a strong and stable government with good policies, which results in long term gains at a higher level even though short term gains may be little due to local currency's value dropping
3) Future loans to the country and to its projects will be issued at a cheaper rate, easily and with more funding options due to the above three.

If anyone of you follow the world economy and associated bodies, the Moody's index has already changed Pakistan's outlook from Negative to Positive (HUGE step for investments), it is primarily because of all of the above, a stronger economy, better policies, better return and a country becoming more stable.

great reply.

 

[Sherlock Holmes]

Dollar at 50, 60 or 70 would be suicidal for Pakistan. Cheap exports are better for Pakistan. If dollar is at 60 or 70 then we would see reduced exports and that would offset difference between import and export. Imports will become cheap and exports will become expensive. That would be worse case as Pakistan already imports more than it exports.

Pakistan needs more cheap exports and less imports. Dollar at 90 is still too much for us. Until exports increases and import decreases we cant risk our exports by bringing dollar at 50 or 60.

Unless you guys are willing to stop importing ACs, new cars and luxury item But we all know how important is that new car, new iphone and new handbag for us as status symbols

 

[Khalidr]

Just another untimely fart by Nawaz.

 

[FaujHistorian]

Dollar at 50, 60 or 70 would be suicidal for Pakistan. Cheap exports are better for Pakistan. If dollar is at 60 or 70 then we would see reduced exports and that would offset difference between import and export. Imports will become cheap and exports will become expensive. That would be worse case as Pakistan already imports more than it exports.

Pakistan needs more cheap exports and less imports. Dollar at 90 is still too much for us. Until exports increases and import decreases we cant risk our exports by bringing dollar at 50 or 60.

Unless you guys are willing to stop importing ACs, new cars and luxury item But we all know how important is that new car, new iphone and new handbag for us as status symbols

Not sure it will be "suicidal"

Imports will be cheaper if rupee is strong.

That means lower net cost for energy.

The same energy that is used to manufacture stuff for exports.

Hence cheaper exports.


So now you see that it is a tricky balance between rupee and dollar. 110 rupees may make exports cheaper on the face, but raw materials shoot up.

 

[forcetrip]

Could someone explain how exactly is the $ supposed to be Rs50-60? Massive internal and external borrowing will shore up currency to boost reserves. Then comes the time to pay the interest rates. When inflation rates are rising one of the simple explanations is that more legal tender is floated. Which in simple term means that you photocopy more money. Now these are simple indicators. All economies are complex. Now in simple terms how exactly is the strengthening of the rupee taking place with close to 9% inflation rate in reference to what Nawaz Sahrif nay Farmaya.

 

[Sherlock Holmes]

Not sure it will be "suicidal"
Imports will be cheaper if rupee is strong.
That means lower net cost for energy.
The same energy that is used to manufacture stuff for exports.
Hence cheaper exports.
So now you see that it is a tricky balance between rupee and dollar. 110 rupees may make exports cheaper on the face, but raw materials shoot up.

I dont know much about economics. But I think there are many factors other than energy. Labor cost would become very high for foreign companies who have their products manufactured here. They would move their production to countries with cheaper labor. If one employee gets $100 per month, at 90 rupees per dollar its Rs 9000. Now imagine dollar at Rs 60. It would make wage drop to Rs 6000 only. That means foreign company would have to pay more, $150 to be exact for the same production that was being done for $100 by one employee per month. Foreign investment in production will fly away.

Cheaper imports would mean people will import more and that would offset the difference of import and exports. More ACs, TVs, Microwave Ovens would would suck more energy. More cars, bikes would be imported because of cheaper imports and they will burn more petrol.

We will still be stuck in the same cycle of more imports and less exports. And we wont be able to compete with other countries like China and Bangladesh which have cheaper labor than Pakistan.

We need less imports and more exports.

 

[Sherlock Holmes]

Could someone explain how exactly is the $ supposed to be Rs50-60? Massive internal and external borrowing will shore up currency to boost reserves. Then comes the time to pay the interest rates. When inflation rates are rising one of the simple explanations is that more legal tender is floated. Which in simple term means that you photocopy more money. Now these are simple indicators. All economies are complex. Now in simple terms how exactly is the strengthening of the rupee taking place with close to 9% inflation rate in reference to what Nawaz Sahrif nay Farmaya.

Nice analysis.

He said that Government kept dollar from dropping to Rs50 Rs60 to protect exporters and manufacturers. In the video there is no mention of 9% inflation rate.

What he is saying is that to prevent damage to exports dollar was kept higher than Rs 50-60.