Pakistan Rupee now at Rs 125.5 to a US dollar in Interbank Market

[SecularNationalist]

its currently at 121.54

 

[Clutch]

How is this great news? People are loosing money only difference is that its not on gunpoint.

Import ... Corruption... And.people not paying taxes.

It always comes back to bite you.

 

[Yaseen1]

we should decrease rupee supply in market and limit printing new currency notes it will strengthen rupee value

 

[ziaulislam]

we should decrease rupee supply in market and limit printing new currency notes it will strengthen rupee value

Doesnt work that way..growth will be affected if that happens
Rupee was wrongly handled for last 5 years or I will say last 30 years.devaluation should have been done slowly for last 5 years...may be 2-3 rupees per year would have put it round about 120 today..now we did shock devaluation ....

Slow devaluation would have not killed the exports..and would have kept reserves high and debt in control..ishaq dar was true hitman or an agent..he even fired state bank representative for not interfering..this disaster was predicted for last 3 years

The true value of rupee should be around 115-120 at this moment with natural devaluation of 1.5- 2%per year or 1.75-2.5 rupees per year to keep it same as other currencies and to keep reasonable growth and inflation...had this strategy done for last 30 years rupee today would have been same as indian rupee rather than this adhoc keeping it high than dropping it as shock measurement

You should not keep rupee artificially high..

 

[Yaseen1]

Doesnt work that way..growth will be affected if that happens
Rupee was wrongly handled for last 5 years or I will say last 30 years.devaluation should have been done slowly for last 5 years...may be 2-3 rupees per year would have put it round about 120 today..now we did shock devaluation ....

Slow devaluation would have not killed the exports..and would have kept reserves high and debt in control..ishaq dar was true hitman or an agent..he even fired state bank representative for not interfering..this disaster was predicted for last 3 years

The true value of rupee should be around 115-120 at this moment with natural devaluation of 1.5- 2%per year or 1.75-2.5 rupees per year to keep it same as other currencies and to keep reasonable growth and inflation...had this strategy done for last 30 years rupee today would have been same as indian rupee rather than this adhoc keeping it high than dropping it as shock measurement

You should not keep rupee artificially high..

growth also depends on political stability ,law and order,skilled labour ,availability of cheap electricity and fuel and infrastructure .currency devaluation is one factor and it is only effective if other factors are also positive and debts are within limits of gdp.here we should focus on other factors also .our currency is already very cheap as compred to china which is largest exporter which mean decrease in export is not due to rupee value but due to other factors also . maintaining rupee value to control debt by regulating rupee supply and printing will not involve use of foreign reserves and not decrease forex reserve so it is good option instead of using forex reserves to mantain rupee value which ishaq dar did to destroy economy

 

[SunilM]

Its 128.75 now. Should touch 130 by friday. Question is, if there is no clear mandate after 25th july, will it touch 150 by the year end or maybe sooner the way things are going?

 

[Śakra]

Its 128.75 now. Should touch 130 by friday. Question is, if there is no clear mandate after 25th july, will it touch 150 by the year end or maybe sooner the way things are going?

Judging by past performance it might breach 200 by year’s end.

 

[zip]

Its 128.75 now. Should touch 130 by friday. Question is, if there is no clear mandate after 25th july, will it touch 150 by the year end or maybe sooner the way things are going?

Any effect on gdp growth ?

 

[SunilM]

Judging by past performance it might breach 200 by year’s end.

I think the Chinese would come to their rescue before that. I see it at 150-160 by the end of the year. On a side note, I have always wondered how CPEC has been till now been about setting up power plants and nothing more. Also, the lead times in building power plants is anywhere between 3 to 5 years as the required equipment has to be manufactured, but in pakistan’s case the plants were setup in 2 to 2.5 years. Its clear that the power plants supplied under CPEC were mothballed plants which the Chinese supplied to recover their investments.It was a win win situation, but now, with where the economy is going, the chinese will think twice before making any further investments. Take the example of shanghai electric, it has but backed out of taking over k-electric. Also the chinese have not bailed out pakistan, but instead kept hem on drip feed, giving them enough breathing space to approach the Imf next month, but thats about it. Interesting times ahead indeed!!

Any effect on gdp growth ?

It will slow down. With their fudged figures, they showed growth a 5.8%, next year should be around 4.5%,and the real effective growth would be between 3 to 3.5%. Lets see how the next government deals with the twin deficit issues. Also you do realize that they are masters at figure fudging. For example their real forex reserves are 9.4 - 6 = 3.4 billion dollars, which is worth less than a months import!! That is why the rupee is tumbling and there is a forex market meltdown, but some posters here want to believe that the devaluation is taking place cause pakistan wants to make its basmati competitive vis a vis india. And you wonder why the economy is in the shape it is!!

 

[zip]

I think the Chinese would come to their rescue before that. I see it at 150-160 by the end of the year. On a side note, I have always wondered how CPEC has been till now been about setting up power plants and nothing more. Also, the lead times in building power plants is anywhere between 3 to 5 years as the required equipment has to be manufactured, but in pakistan’s case the plants were setup in 2 to 2.5 years. Its clear that the power plants supplied under CPEC were mothballed plants which the Chinese supplied to recover their investments.It was a win win situation, but now, with where the economy is going, the chinese will think twice before making any further investments. Take the example of shanghai electric, it has but backed out of taking over k-electric. Also the chinese have not bailed out pakistan, but instead kept hem on drip feed, giving them enough breathing space to approach the Imf next month, but thats about it. Interesting times ahead indeed!!



It will slow down. With their fudged figures, they showed growth a 5.8%, next year should be around 4.5%,and the real effective growth would be between 3 to 3.5%. Lets see how the next government deals with the twin deficit issues. Also you do realize that they are masters at figure fudging. For example their real forex reserves are 9.4 - 6 = 3.4 billion dollars, which is worth less than a months import!! That is why the rupee is tumbling and there is a forex market meltdown, but some posters here want to believe that the devaluation is taking place cause pakistan wants to make its basmati competitive vis a vis india. And you wonder why the economy is in the shape it is!!

Since cpec is loan it should have had a positive effect on forex reserves right ?

 

[SunilM]

Since cpec is loan it should have had a positive effect on forex reserves right ?

Ok, you must understand how investment in power works, cause CPEC till now is about power plant construction and nothing more. You see, all Pakistan was required to do was import contruction machinery and nothing more. The chinese setup the plants on land provided by pakistan free of cost to them. The investor/chinese are going to be provided ROI/ROE on their investment through the execution of a long term power purchase agreement. These agreements are for a tenure of 25-30 years. Now normally, the ROE/ROI is around 10 to 12 %, but in Pakistan’s case its as high as 27 to 30 %. This is precisely the reason they want to keep these contracts away from public. So forex reserves will be initially be depleted due to import of construction equipments and paying for execution of turn key projects, but the depletion rate will increase as soon as these plants start commecial operation as a fixed amount od 30% return on invesment has been gauranteed as per the terms of the PPA. And whatever people might say, these payments are made in dollars and not remnimbi.

 

[zip]

Ok, you must understand how investment in power works, cause CPEC till now is about power plant construction and nothing more. You see, all Pakistan was required to do was import contruction machinery and nothing more. The chinese setup the plants on land provided by pakistan free of cost to them. The investor/chinese are going to be provided ROI/ROE on their investment through the execution of a long term power purchase agreement. These agreements are for a tenure of 25-30 years. Now normally, the ROE/ROI is around 10 to 12 %, but in Pakistan’s case its as high as 27 to 30 %. This is precisely the reason they want to keep these contracts away from public. So forex reserves will be initially be depleted due to import of construction equipments and paying for execution of turn key projects, but the depletion rate will increase as soon as these plants start commecial operation as a fixed amount od 30% return on invesment has been gauranteed as per the terms of the PPA. And whatever people might say, these payments are made in dollars and not remnimbi.

If cpec is loan from Chinese govt to pakistan govt then the loan amount first comes to reserve bank of pakistan ..Agreed in this case no global tender was floated and work was given to Chinese companies but apart from imported machineries all other infrastructure items are local ..So where is the possibility of diminishing reserves when all of the project amount are deposited in reserves and fraction of it was taken out of the country in the form of imported machineries and profit earned by Chinese companies ?

 

[SunilM]

If cpec is loan from Chinese govt to pakistan govt then the loan amount first comes to reserve bank of pakistan ..Agreed in this case no global tender was floated and work was given to Chinese companies but apart from imported machineries all other infrastructure items are local ..So where is the possibility of diminishing reserves when all of the project amount are deposited in reserves and fraction of it was taken out of the country in the form of imported machineries and profit earned by Chinese companies ?

Thats what i am telling you, there is nothing deposited in SBP. Otherwise their reserves would not be a few billion dollars. The repayment is baked into the PPA. Its a risk the chinese are willing to take, that the pakistani’s will give them the assured returns promised to them.

 

[El Sidd]

Thats what i am telling you, there is nothing deposited in SBP. Otherwise their reserves would not be a few billion dollars. The repayment is baked into the PPA. Its a risk the chinese are willing to take, that the pakistani’s will give them the assured returns promised to them.

So how long will it be till Pakistan has to declare bankruptcy?

 

[zip]

Thats what i am telling you, there is nothing deposited in SBP. Otherwise their reserves would not be a few billion dollars. The repayment is baked into the PPA. Its a risk the chinese are willing to take, that the pakistani’s will give them the assured returns promised to them.

Will they bypass reserve bank of pakistan for repayment of loans too ?