Pakistani rupee sinks to record low against dollar

[American Pakistani]

Are Pakistanis enjoying the fruit of DEMO crazy? This is just a DEMO...crazy things are about to happen when PPP or PML-N will again takeover for 5 more years.

Sorry for my ignorence but can anyone tell me if Pakistan can convert 100 Rupees into 1 New Pakistani Rupee or something like that??? anything under PKR 100 will become cents...or in Pakistani language Paisas...? I know this is just stupid question but still i wanna clear up my mind.

 

[RazorMC]

...I am saying about the money that was taken from loan from IMF in 2008. Where did that money go? In which project in particular it was used and why was there a need for loan at first place....

Hmmmm. That money is happily sitting in their numerous accounts in offshore banks. If you heard about our "Rental" Raja and his wonderful adventures in the Rental Power fraud, you'll get the idea

Are Pakistanis enjoying the fruit of DEMO crazy? This is just a DEMO...crazy things are about to happen when PPP or PML-N will again takeover for 5 more years.

Sorry for my ignorence but can anyone tell me if Pakistan can convert 100 Rupees into 1 New Pakistani Rupee or something like that??? anything under PKR 100 will become cents...or in Pakistani language Paisas...? I know this is just stupid question but still i wanna clear up my mind.

Technically, it is possible to do this by introducing a new currency. But this would mean that we would have to default on public debt worth trillions of PKR and possibly even foreign ones.

Even though it is possible, it is highly dangerous. We will lose a lot of investor confidence (which is already dangerously low), our banking sector will be hurt badly and our international standing will also suffer a setback.

 

[INDIC]

I am saying about the money that was taken from loan from IMF in 2008. Where did that money go?

That money is meant to improve credit rating and balance of payment otherwise the country could not import essential goods mainly oil bills to run the country. Yes, one can't rule out corruption. Right now, Pakistan's foreign exchange is dropping at very fast rate.

 

[Bobby]

We are almost there ......1 INR = 2 PKR

 

[MST]

Good for Pakistan. It will make your exports more competitive. Look at the Japanese. They are doing the same thing with Yen.

 

[Mian H Amin.]

lol its not a case of more imports or less exports but a case of devaluation of currency. which our govt do to obtain loans from imp or world bank. nad if you keep taking loan you will have to keep devaluating...

 

[livingdead]

lol its not a case of more imports or less exports but a case of devaluation of currency. which our govt do to obtain loans from imp or world bank. nad if you keep taking loan you will have to keep devaluating...

how much money did you send today...

 

[Mian H Amin.]

what do you mean ???

 

[JanjaWeed]

Works well for most of the top political leaders in Pakistan since most of their income comes from overseas. 1USD = 100PKR? time for Zardari & Sharif bros to bring in more dollars into the country.

 

[Chinese-Dragon]

Pakistani exporters must be rubbing their hands with glee! Less competition from rivals too as their stuff would be cheaper than others! They'll probably give the Chinese a run for their money!

Good for Pakistan. It will make your exports more competitive. Look at the Japanese. They are doing the same thing with Yen.

It's not so simple. You can't suddenly become a lot more competitive just because your currency is depreciating.

Look at the Chinese Yuan, it has actually been appreciating against the dollar for the whole past decade.

XE.com - CNY/USD Chart

Currency depreciation does give a small boost to exports yes, however underlying competitiveness depends on the entire system within the country.

If you want to be more competitive, you have to reform the underlying system. And optimize the entire supply chain.

 

[Arav_Rana]

We are almost there ......1 INR = 2 PKR

Don't look at PKR.
1 $ = 53.95 rupee

Our neighbor 1 $= 6.23 Y.

Ignore PKR. We have a lot of people ahead of us. N we have to chase them not PKR

 

[Ayush]

economic development is the most important one.best of luck.

 

[Azazel]

Good for Pakistan. It will make your exports more competitive. Look at the Japanese. They are doing the same thing with Yen.

No,it won't.Pakistan has high trade deficit.This will make their imports cost higher and widen their current account deficit.As a result, their inflation will rise making most of their export less competitive.Unlike Pakistan Japan is a trade surplus country.There are a lot of differences between both economies.

 

[MST]

No,it won't.Pakistan has high trade deficit.This will make their imports cost higher and widen their current account deficit. As a result, their inflation will rise making most of their export less competitive.Unlike Pakistan Japan is a trade surplus country.There are a lot of differences between both economies.

Japan is a good case study. I am not sure if you know but imports are heavily taxed in Japan. There is a concentrated effort to dissuade use of imported items 1) through nationalism 2) taxation. E.g. If you want to buy Indian Rice you have to pay a fortune. While Japanese rice is cheap. One reason why its so hard to penetrate Japan for outside companies. This is a good case study for developing countries who want to avoid deficit.

It's not so simple. You can't suddenly become a lot more competitive just because your currency is depreciating.

Look at the Chinese Yuan, it has actually been appreciating against the dollar for the whole past decade.

XE.com - CNY/USD Chart

Currency depreciation does give a small boost to exports yes, however underlying competitiveness depends on the entire system within the country.

If you want to be more competitive, you have to reform the underlying system. And optimize the entire supply chain.

Okay need to clarify a couple of things before I explain why I said that.

1) A devalued currency doesn't necessarily means a bad economy (Japan, South Korea)
2) I never said Pakistan Economy is good. Its needs a lot of improvement.

Now the economy and currency devaluation works in cycles.

Let me use this example to to explain what I am saying. Lets take a case of India (lot of Pakistanis will needlessly troll if I use Pakistan as an example. Want to avoid that.). India has deficit due to imports > Exports. Now if this becomes more i.e. imports >> exports. Rupee devaluates. Than what happens. Imports reduce (since people can't buy the imported items in same quantity - assuming the purchasing power to be same). Exports increase since they become more competitive in international market. Now lets say in a hypothetical scenario this continues to a point where Exports > Imports. Rupee will strengthen and the cycle will go through but this time in opposite direction. Now in some case (China is a good example) if your industry is strong or you innovate (US) then you continue to grow i.e. Exports >> Imports. This is 101 of Economics.

The point I made about Pakistani currency is in this context. So devaluation is not bad if you can take advantage of it. And when you say imports will lead to lot of burden on common people in Pakistan. Then present day Economics has nothing to do with common people. That is 102 of economics. Heck if the world cared even a bit about common people we will all be socialists.


Disclaimer - There are a lot of other dependencies that come to play here but I am avoiding them to keep this explaination very simple

 

[Chinese-Dragon]

The point I made about Pakistani currency is in this context. So devaluation is not bad if you can take advantage of it.

That is very true.