Rupee strengthens to 97.90 against dollar

[Edevelop]

Oye Sheikh Rasheed ab tera kya banay ga

KARACHI: Dollar has further depreciated against Pakistani rupee and now it values 97.90 rupees in the interbank market on Wednesday.

Several prudent measures by the government including ban on import of gold and investment flows have helped strengthen the rupee.
According to State Bank of Pakistan‚ the country received foreign direct investment of 523 million dollars in the first seven months of current fiscal year with 106.9 million dollars in the month of January alone.

In addition‚ the expected receipt of 550 million dollars from the International Monetary fund along with the proposed launch of Eurobonds next month has also led to positivity in the foreign exchange market.

Earlier‚ the rupee gone up sharply against dollar which declined to 99.90 rupees in the inter-bank market on Tuesday (March 11).

Meanwhile‚ in an interview‚ Finance Minister‚ Muhammad Ishaq Dar said all out efforts are being made to stabilise Pakistani currency.

He said national economy is showing upward trend and the rupee will further strengthen.

Dar said inflation is moving down and foreign reserves increasing.

To a question‚ Ishaq Dar said international markets are reposing confidence in the markets of Pakistan and showing keen interest in different sectors.

He said measures are being taken to control the smuggling of gold. He said measures are also being taken to resolve energy problem and to add more energy in the system.

Ishaq Dar said gas supply will be ensured to industrial sector.

ONLINE - International News Network

 

[Creder]

so we doing a thread on every single rupee now ? no better way to spam the board ?

 

[American Pakistani]

wow...this is interesting...

97.900...i' am speechless. (No sarcasm intended).

@Talon @Pakistanisage

Edit: It is 97.850 now.

 

[VCheng]

The more the value of the PKR is pumped up artificially, the great the pain will be on the adjustment, which is inevitable.

 

[Dubious]

wow...this is interesting...

97.900...i' am speechless. (No sarcasm intended).

@Talon @Pakistanisage

Edit: It is 97.850 now.

Is this for real...its falling so fast...need to change some US$ to Rs...Damn I only have £ and Euro

The more the value of the PKR is pumped up artificially, the great the pain will be on the adjustment, which is inevitable.

and the pessimist burst the optimistic's bubble

 

[Raja.Pakistani]

Finance Minister Ishaq Dar appears to have got his wish: the rupee is back to the parity that it had around the time the Nawaz Administration took office. While there is much cheering of the news in government quarters, we must ask the question: how exactly has the government achieved this goal, and what was its objective in doing so? Because while we are glad that the cost of energy imports will be lower, we find ourselves perturbed by some of the adhoc measures the government has taken to get there.

Part of the reason, for instance, that the exchange rate has been falling is because payments for oil imports are no longer being made through the interbank market, instead relying on trade financing facilities. This is somewhat similar to a technique that the Musharraf Administration used during its tenure to keep the rupee stable around the Rs60 mark. The Nawaz Administration thinks it can do so again to keep the rupee stable, this time around, the Rs100 to the US dollar mark. They are wrong and about to make a potentially big mistake.

In the first instance, the Musharraf Administration’s real ability to keep the exchange rate stable was its luck in being able to increase foreign investment at roughly the same pace that the oil import bill went up. The Nawaz Administration has not been able to replicate this performance. Indeed, foreign investment inflows in the first few months of this government are even lower than the abysmal record set in the last year of the previous government. And in the second instance, there is a limit to how much the government can continue to make deferred payments for imported oil. Our horrible addition to credit has led the Saudis to already stop selling oil to us. But the government seems hell bent on ensuring that even Abu Dhabi and Kuwait, our two biggest suppliers of oil, cut us off as well. This then begs the real question: why exactly is the finance minister so fixated with a specific exchange rate? Having a stable exchange rate is a good policy goal. It gives predictability to businesses and helps curb inflation. But there was absolutely no reason why the government could not simply ensure that the rupee stayed at Rs108 to the US dollar rather than using unsustainable, adhoc measures to force it back to Rs100 to the dollar. What exactly has this appreciation of the rupee achieved? More importantly, what cost will the economy pay in the future for such a move?

Economists and market analysts are already calling the recent rally in the currency markets a ‘sentiment driven’ phenomenon that is not backed up by macroeconomic fundamentals. We tend to concur with that analysis, and fear that the government is setting itself up for a future crash of the rupee. But unlike the depreciation last year, this time around, the government will have far fewer resources to stem the tide. It will have exhausted its credit lines with oil exporting countries and it will have a far more precarious financial position that will severely curtail its limit to interfere with the market.

The reality is that the Pakistani rupee is a structurally weak currency and will continue to depreciate over time. This is because the government of the country absolutely refuses to set its own house in order by raising taxes from the wealthy and thus runs massive budget deficits. The government creates a hostile environment for investment, which results in more money wanting to leave Pakistan than wanting to come in. As a result, there is a greater demand for dollars and less of a demand for rupees. The only way to address the weakness of the rupee is to address the structural weaknesses of the economy. But judging by how the administration is running tax policy, energy policy, and a whole host of other economic management issues, it seems that the government has no appetite to fix the real problem any time soon.

Published in The Express Tribune, March 13th, 2014.

 

[VCheng]

Is this for real...its falling so fast...need to change some US$ to Rs...Damn I only have £ and Euro


and the pessimist burst the optimistic's bubble

Exchange only the minimum amount you need to convert for now. You will get more PKRs for the same amount once this bubble bursts.

Economists and market analysts are already calling the recent rally in the currency markets a ‘sentiment driven’ phenomenon that is not backed up by macroeconomic fundamentals. We tend to concur with that analysis, and fear that the government is setting itself up for a future crash of the rupee. But unlike the depreciation last year, this time around, the government will have far fewer resources to stem the tide. It will have exhausted its credit lines with oil exporting countries and it will have a far more precarious financial position that will severely curtail its limit to interfere with the market.
The reality is that the Pakistani rupee is a structurally weak currency and will continue to depreciate over time. This is because the government of the country absolutely refuses to set its own house in order by raising taxes from the wealthy and thus runs massive budget deficits. The government creates a hostile environment for investment, which results in more money wanting to leave Pakistan than wanting to come in. As a result, there is a greater demand for dollars and less of a demand for rupees. The only way to address the weakness of the rupee is to address the structural weaknesses of the economy. But judging by how the administration is running tax policy, energy policy, and a whole host of other economic management issues, it seems that the government has no appetite to fix the real problem any time soon.

This is not pessimism, but only the reality, the same as what I have been saying all along.

 

[American Pakistani]

Is this for real...its falling so fast...need to change some US$ to Rs...Damn I only have £ and Euro

More better option would be buy a property in Pakistan or start/invest a small business.

 

[SHAMK9]

More better option would be buy a property in Pakistan or start/invest a small business.

A plot in Bahria town

 

[farhan_9909]

Considering that 3Billion worth reserves will also be saved since the Govt wants to import oil for 3 months by banks money.

Most important Pakistan is also discussing a possibility of 10Billion dollars worth oil deal with Saudi arabia and kuwait on deferred payment.

more than a Billion from 3g Auction.

Export has witnessed a 18% growth rate.Which means even if the situation remain so.We will hit 40Billion dollars within 2 or max 2 and half years.

In the end I see the Rupee value to drop upto 90 and remain for this whole year.And by 2016-17 When our Growth rate is more than 6%,Reserve more than 20Billion dollars and export also more than 40Billion dollars.Than the Rupee value against dollars will be more like 70.

 

[iPhone]

Apparently Sheikh Rasheed is going to blow the lid off this whole affair of the currency manipulation by the govt some time soon.

 

[VCheng]

In the end I see the Rupee value to drop upto 90 and remain for this whole year.And by 2016-17 When our Growth rate is more than 6%,Reserve more than 20Billion dollars and export also more than 40Billion dollars.Than the Rupee value against dollars will be more like 70.

Given the fundamentals, all indications are that the PKR will remain on a path of steady decline in value of about 10% per year, approaching 150 to the dollar by the end of term of this government.

 

[Bilal.]

Given the fundamentals, all indications are that the PKR will remain on a path of steady decline in value of about 10% per year, approaching 150 to the dollar by the end of term of this government.

Given what fundamentals? give me specifics, tell me how did you calculate 10% decline per year? give solid data and calculations or stop.

 

[VCheng]

Given what fundamentals? give me specifics, tell me how did you calculate 10% decline per year? give solid data and calculations or stop.

I have posted the history of the decline elsewhere on PDF already. As long as Pakistan produces less than what it consumes, it will continue to decline the value of its currency. That is a fundamental fact from which there is no escape.

 

[farhan_9909]

Given the fundamentals, all indications are that the PKR will remain on a path of steady decline in value of about 10% per year, approaching 150 to the dollar by the end of term of this government.

And what are those fundamentals?

By the End of this Govt term,Our Economy status will be either like this or even better


*More than 6% Growth rate
*More than 30Billion dollars reserves
*Export if the present growth rate continue so than atleast 50Billion dollars
*We know Alot of energy projects are in the Pipe and will add 2000-3000mw by the next 2-3 years.
*GDP More than 500Billion dollars atleast(If the GDP by the end of june this year Indeed is 28.4trillion PKR Which translate to 298Bn$)

With this happening,I don't know how will PKR reach 150 against a dollar.

I believe PKR crossing 100 again is not possible in this decade.