Panic in market. As Pakistan effectively nears default

[ziaulislam]

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Debt crisis is new default??

 

[epebble]

Debt crisis is new default??

Yes, normally, sovereign defaults are sometimes politely described as debt crises. Since private investors may not be involved, nothing is gained by 'declaring' default. Money was to be paid on a certain date; it was not paid. That's all.

 

[maithil]

Only a fool will use banking channels to send dollars if there is 25 rupees difference with open market.. Expect official remittances to fall further...

 

[epebble]

Only a fool will use banking channels to send dollars if there is 25 rupees difference with open market.. Expect official remittances to fall further...

If they really put their mind to it, can't the government stop unofficial channels? Unofficial channel means smuggling; Pakistan has no meaningful land borders that can be used to smuggle currency etc., (Two western borders are effectively dysfunctional as those nations themselves are isolated, Eastern border is sealed) How hard is it to enforce Export/Import controls at Air and Sea Ports?

 

[maithil]

If they really put their mind to it, can't the government stop unofficial channels? Unofficial channel means smuggling; Pakistan has no meaningful land borders that can be used to smuggle currency etc., (Two western borders are effectively dysfunctional as those nations themselves are isolated, Eastern border is sealed) How hard is it to enforce Export/Import controls at Air and Sea Ports?

Iran-Pakistan and Afghanistan-Pakistan borders for all practical purposes are huge smuggling routes. Livelihood of people living in border areas depend on smuggling. Even the border guards/rangers actively participate in this and earn huge sums. There is no way Pakistan’s government can stop this. Not in their control.

With such gap between official and unofficial exchange rate (close to 15%), people will always opt for unofficial channels to send remittances to their families.