Pakistan Rupee sinks on concerns over balance of payments

[wiseone2]

The most funny part of this news : Nawaz said , all happened because of my removal , Ismail Muftah said: it was long due and Govt did this correction ....................... Hello Mr Ex Pm.. what you been doing ... Some govt official said : It will eventually stop at 150.

that is a mighty fall to 150 rupees for 1 US dollar

 

[AZADPAKISTAN2009]

It's funny our currency sinks every concern while US with 20 trillion dollar concern is bench mark for world hahahaah what a corny financial world

 

[Nilgiri]

As a currency depreciates, it weakens the purchasing power of that country...including its importers. So the general trend is a decline in imports.

The opposite happens for foreign importers...their currency now stands stronger comparatively...and hence the general trend is that exports of the country whose money got depreciated, increase.

Of course I could be wrong since I'm no expert and only going off of general trends. Could u perhaps shed more light on why the general trend wouldn't happen in this case?

It really depends on how competitive (i.e the price elasticity) the industries/services in question are w.r.t world market norms.

Pakistan industry (esp export oriented) has really suffered for quite some time now, so I think overall in the short to medium term, the depreciation hurts Pakistan lot more than it benefits, simply because its imports are way more price inelastic (i.e you have to import them with little alternative) than its exports (good solid competition from many countries in the price point and USP w.r.t what Pakistan makes for export right now that can buffer an immediate drop in final price etc......, and possible exports are undercut by large degree from the get go already esp given the capital investment required and other issues within Pakistan to get them rolling).

Add to that the debt servicing/repayments that get caught up in it...that will now cost more PKR to do....and have multiplier effect on rest of govt spending/extraction/borrowing ability.

The depreciation simply happened from a worsening govt management catching up with physical reality of liquidity reserves to prop up the earlier rate.

Honestly what level it will stabilise at basically depends on where the competitive threshold of Pakistan economy lies w.r.t world economy in relation to the liquidity ratios inside Pakistan and outside it.

 

[AZADPAKISTAN2009]

Just a artificially created issue PTI will correct it

 

[wiseone2]

It's funny our currency sinks every concern while US with 20 trillion dollar concern is bench mark for world hahahaah what a corny financial world

USA generates most of the technology the world needs. They have a potent military to protect their allies. they have lots of real estate to sell.

 

[ashok321]

Its time Pakistan floats its own Crypto a la Venezuela!

 

[Count Dracula]

lol these armchair economists here in pdf are hilarious, specially Indians. Better to keep quiet than pretending to know everything under the sun. But i guess thats the trait they received from their modern Indian education.

 

[Ryuzaki]

Pakistanis here were very happy with huge reduction in trade with Afghanistan,this is one of the side effects

 

[Max]

We sold many entities due to which flow of dollar is outward . It seems rupee will devalue further

Which dollar making machine aka entity we sold? Every govt/ civilian run Dept is making losses from 90's.