Is the rupee undervalued?

[VCheng]

an year ago i remember PKR depreciated to 108 against a USD but after that PKR again appreciated to 104.8 and i didn't saw economic shocks etc prevailing here. PKR was depreciated on the demand of IMF and other than that I don't see any reason for depreciating PKR

The value of the PKR is not determined by IMF. If Pakistan produces more than it consumes, its currency will appreciate. If it consumes more than it produces, its currency will depreciate. The falling value shows the adverse balance of Pakistan's payments.

 

[Indus Pakistan]

Living standards and social development are abysmal across the board in South Asia.

They are abysmal in Pakistan and even more abysmal in India - nothing new there but why does Pakistan get canned always?

 

[BetterPakistan]

The value of the PKR is not determined by IMF. If Pakistan produces more than it consumes, its currency will appreciate. If it consumes more than it produces, its currency will depreciate. The falling value shows the adverse balance of Pakistan's payments.

This is the main issue.

Demand and Supply gap can be influenced by government and this is what I am saying.

@Syed.Ali.Haider

Do you think there is any space for appreciating local currency if demand and supply gap can be resolved? I mean it will decrease our external debt, servicing and it will also lead to reduction in inflation.

The main problem I faces is that when I compare it with other regional countries than I feel that our currency is undervalued.

 

[VCheng]

They are abysmal in Pakistan and even more abysmal in India - nothing new there but why does Pakistan get canned always?

I simply do not worry about India other than its effect on Pakistan. Pakistan does need to put more effort into its own social development, and the results will bring around any perceived imbalances soon enough. Substance, not image, will help Pakistan, nothing else.

This is the main issue.

Demand and Supply gap can be influenced by government and this is what I am saying.

@Syed.Ali.Haider

Do you think there is any space for appreciating local currency if demand and supply gap can be resolved? I mean it will decrease our external debt, servicing and it will also lead to reduction in inflation.

The main problem I faces is that when I compare it with other regional countries than I feel that our currency is undervalued.

Ask yourself this question: What can Pakistan produce that other countries will want to buy, so that it gets more USD in exchange for its PKR? Based on this criterion, the PKR is overvalued since what Pakistan produces, not many wish to buy, while Pakistan itself has a huge demand for energy and other imports.

 

[BetterPakistan]

Ask yourself this question: What can Pakistan produce that other countries will want to buy, so that it gets more USD in exchange for its PKR? Based on this criterion, the PKR is overvalued since what Pakistan produces, not many wish to buy, while Pakistan itself has a huge demand for energy and other imports.

Exports-Imports deficit can turn into surplus in 5 years. Pakistan can meet its energy demand through its indigenous resources and only resolving this issue can bring our deficit to zero..

And what about remittances? Last year we received $20 bn in remittances.. FDI??
And the latest trend foreign loans

 

[VCheng]

Exports-Imports deficit can turn into surplus in a 5 years. Pakistan can meet its energy demand through its indigenous resources and only resolving this issue can bring our deficit to zero..

Yes, but how? What you say above sounds great, but very difficult to actually implement.

 

[BetterPakistan]

Yes, but how? What you say above sounds great, but very difficult to actually implement.

Switching to coal based generation of power from present oil, which in turn will reduce $5 Billion of imports.
Fulfilling power demand will reduce $2.5-3 bn of generator imports.
Using our steel mill to fulfill our steel demand can reduce $2 bn steel imports.

 

[Stephen Cohen]

Exports-Imports deficit can turn into surplus in 5 years. Pakistan can meet its energy demand through its indigenous resources and only resolving this issue can bring our deficit to zero..

Your Trade deficit is increasing every year
And your exports are declining

If you appreciate the rupee ; your exports will completely come to a halt
This is simple economics 101

Because the exporters will not be able to recover even their input costs
rendering them un competitive

PS : when a Power house like CHINA is depreciating its currency
for keeping its export edge ; Other countries too have to do the same

 

[BetterPakistan]

Your Trade deficit is increasing every year
And your exports are declining

If you appreciate the rupee ; your exports will completely come to a halt
This is simple economics 101

Because the exporters will not be able to recover even their input costs
rendering them un competitive

PS : when a Power house like CHINA is depreciating its currency
for keeping its export edge ; Other countries too have to do the same

Our exports has reduced from $25 to $20 bn but in the same way our imports has also reduced from $40 bn + to $32 bn last year.

"If you appreciate the rupee ; your exports will completely come to a halt
This is simple economics 101"
This is not as simple as you mentioned. Exports can be kept competitive. We can reduce the cost of exports by reducing taxes. Exports are taxed a lot in Pakistan. Appreciating pkr will lead to decline in prices of oil which we import which in return will reduce power and fuel prices. I am not saying to appreciate pkr in a month nor its possible. I am talking about a complete plan to deal with it.

There's a big difference in China and Pakistan position. PKR is already undervalued.

 

[Stephen Cohen]

Our exports has reduced from $25 to $20 bn but in the same way our imports has also reduced from $40 bn + to $32 bn last year.

WRONG way to look at it

What maters is the Trade deficit and the Current account deficit

On both counts you are suffering

Pakistan trade deficit swells 29 percent to $17.4 billion in July-Jan period

http://dunyanews.tv/en/Business/374528-Pakistan-trade-deficit-swells-29-percent-to-174-


Pakistan’s current account deficit widens by a staggering 90%

https://tribune.com.pk/story/1330442/pakistans-current-account-widens-staggering-90/

 

[BetterPakistan]

WRONG way to look at it

What maters is the Trade deficit and the Current account deficit

On both counts you are suffering

Pakistan trade deficit swells 29 percent to $17.4 billion in July-Jan period

http://dunyanews.tv/en/Business/374528-Pakistan-trade-deficit-swells-29-percent-to-174-


Pakistan’s current account deficit widens by a staggering 90%

https://tribune.com.pk/story/1330442/pakistans-current-account-widens-staggering-90/

This is initial estimation of present year. Let the year complete.

How come you forgot the remittances??? $20 bn last year? What about FDI which will touch $2 bn mark this year? I have previously stated that I have done a complete research on it.

 

[Stephen Cohen]

This is initial estimation of present year. Let the year complete.

How come you forgot the remittances??? $20 bn last year? What about FDI which will touch $2 bn mark this year? I have previously stated that I have done a complete research on it.

Yes please let the year come to an end ; and then see the facts

By the way another Two metrices namely External debt
and Forex reserves are also getting worse

Your remittance do not cover your trade deficit

This year trade deficit will be 25 Billion dollars and Remittances around 20 billion

Then there is the biggest elephant in the room
The external debt ; debt servicing consumes more than 6 Billion dollars per year

 

[BetterPakistan]

Yes please let the year come to an end ; and then see the facts

By the way another Two metrices namely External debt
and Forex reserves are also getting worse

Your remittance do not cover your trade deficit

This year trade deficit will be 25 Billion dollars and Remittances around 20 billion

Then there is the biggest elephant in the room
The external debt ; debt servicing consumes more than 6 Billion dollars per year

O Hello, Where are you living??

Pakistan public debt to GDP ratio will decrease this year, Pakistan external debt as % of GDP will decrease this year.

"This year trade deficit will be 25 Billion dollars and Remittances around 20 billion"
Prove it first? I don't trust it.


Last year, Pakistan exports was recorded $18 bn and imports was recorded $32 bn means $14 bn deficit. Remittances was recorded $20 bn and FDI was recorded $1 bn+ last year so where is the deficit??

Pakistan external debt servicing for present year is 113 bn PKR means $1.08 bn for present year as stated in official budget on Pakistani Government official website.

Get your facts right first.

Come up with something logical.

 

[Stephen Cohen]

O Hello, Where are you living??

Pakistan public debt to GDP ratio will decrease this year, Pakistan external debt as % of GDP will decrease this year.

"This year trade deficit will be 25 Billion dollars and Remittances around 20 billion"
Prove it first? I don't trust it.


Last year, Pakistan exports was recorded $18 bn and imports was recorded $32 bn means $14 bn deficit. Remittances was recorded $20 bn and FDI was recorded $1 bn+ last year so where is the deficit??

Pakistan external debt servicing for present year is 113 bn PKR means $1.08 bn for present year as stated in official budget on Pakistani Government official website.

Get your facts right first.

Come up with something logical.

You are free to live in your own world

Just wait till August to get all the figures for the current year which ends on June 30 th

 

[BetterPakistan]

You are free to live in your own world

Just wait till August to get all the figures for the current year which ends on June 30 th

Mujhe pata tha end mai tum yehi kahogay

I am giving you official figures and you are talking about future. Apkay to kia hi kehnai hain