Rupee to depreciate Rs160-165 against US dollar by Dec 2019

[Hiraa]

Pak Rupee to stabilize around 135/Dollar after IMF deal....

That’s not possible really.

I feel it will get to Rs150 max

 

[CrazyZ]

I would expect continued devaluation untill the current account deficit turns into surplus.

 

[VCheng]

Meanwhile

Pakistan accepts IMF’s conditions for bailout package
https://92newshd.tv/pakistan-accepts-imfs-conditions-for-bailout-package/amp/


Every major demand of IMF has been accepted. Including the ones which were supposedly harmful for Pakistan’s interest.

Oh Bhai, IMF has not made any demands. All it can do is accept Pakistan's plans for balancing its books.

 

[Abdussamad]

Financial emergency should be imposed and all exchange houses closed for foreseeable future. Stop all cash trading of $ immediately, get that through the Finance Bill, and all this speculation will die.

No it'll just move to a black market. Also our OTC market is tiny compared to our interbank market. Doing this won't help and will in fact make things worse.

 

[TheDarkKnight]

Oh Bhai, IMF has not made any demands. All it can do is accept Pakistan's plans for balancing its books.

So if we had to get in the IMF program, what was the use of getting support from close allies and keeping the market uncertain for 10months? Politically also a bad move as 1) the honeymoon period of pti govt is almost over in which these tough decisions could have been taken 2) the brunt of these changes could have been rightly blamed on PMLN and previous govts, but now it will all be on PTI
A Punjabi saying comes to mind, which literally translated to English: 100 shoes 100 onions!

 

[Verve]

No it'll just move to a black market. Also our OTC market is tiny compared to our interbank market. Doing this won't help and will in fact make things worse.

OTC should be shut down for foreseeable future.

Black market will be limited and won't fluctuate the dollar much.

State Bank determines the rate and only exchange happens in bank accounts. No cash $ out of the banking system.

This measure is to control the mafia market forces from manipulating the rate.

Corruption is in rupees and then it's converted to $ in open market. Then the $ is laundered by different means. If you make that difficult and kill new cash $ supply, all that the black market will have to play with are the hidden cash $ holdings. And those will dry out fast.

 

[FOOLS_NIGHTMARE]

 

[VCheng]

So if we had to get in the IMF program, what was the use of getting support from close allies and keeping the market uncertain for 10months? Politically also a bad move as 1) the honeymoon period of pti govt is almost over in which these tough decisions could have been taken 2) the brunt of these changes could have been rightly blamed on PMLN and previous govts, but now it will all be on PTI
A Punjabi saying comes to mind, which literally translated to English: 100 shoes 100 onions!

May be somebody should explain that joke to PMIK and ts relevance to his IMF decision in easy to understand terms.

 

[FOOLS_NIGHTMARE]

https://twitter.com/x/status/1127160652127252481

 

[Men in Green]

Good for me.

 

[FOOLS_NIGHTMARE]

Good for me.

https://twitter.com/x/status/1127145229516201984

 

[alphibeti]

KARACHI: Pakistan is bracing for an economic jolt as the government is expected to allow a significant rupee depreciation and key interest rate hike in 2019. These steps will be taken to implement the International Monetary Fund’s (IMF) loan programme, a research house of a brokerage firm said on Wednesday.

In a paper on “Pakistan’s Economy: IMF Programme and its Implications”, Topline Research said the government was expected to let the rupee depreciate 13-17% to Rs160-165 against the US dollar by December 2019 and the key interest rate may be raised by 1.25 percentage points to the peak of 12% during the year.

Earlier, the central bank had let the currency depreciate by 34% to Rs141.3 to the greenback and increased the interest rate by five percentage points to 10.75% since December 2017.


The measures are feared to slow down economic activities as reflected in contraction of the large-scale manufacturing sector and lower agricultural production, where additional impact came from poor water management.

Rupee strengthens against dollar

Previously, the State Bank of Pakistan (SBP) and several international and local institutions estimated Pakistan’s gross domestic product (GDP) growth in the range of 2.5-3.5% in FY19 compared to a decade high growth of 5.2% in FY18.

The implementation of IMF programme may further worsen economic activities from the earlier forecast. “We may see major steps towards fiscal, monetary and structural reforms in the next few weeks either with or before the budget that is expected to be announced in the next few weeks. These may include rupee depreciation/free float, further hike in interest rate, increase in energy prices, elimination of subsidies, new and more taxes, aggressive privatisation among others,” the research house stated.

“Once again the IMF will demand the rupee’s free-float and we expect the rupee to settle in the range of Rs160-165 by December 2019,” it said.

Ten-month tax revenues show a shortfall of around Rs345 billion (0.9% of GDP) while the “budget deficit is expected to exceed 7% of GDP in FY19 after a gap of five years”, it added. Given the increased taxation measures to shore up revenues, reduction in subsidies and rupee depreciation, “we expect inflation to average in low double digits in FY20; we expect the central bank’s policy rate to peak at 12% during 2019”, according to the research house.

PSX outlook remains gloomy ahead of tough IMF programme

The IMF programme is expected to include key technical benchmarks including Net Domestic Assets (NDA) and Net International Reserves (NIR) targets, which will reduce borrowing from the central bank and increase forex reserves, respectively.

The government will have to pay more attention to privatising and restructuring loss-making state-owned enterprises. Moreover, the energy-sector reform and resolution of the outstanding circular debt will also likely be part of the IMF programme.

IMF expected to lend $10b

“Although the previous finance minister expected a $6-8 billion IMF package, we think the size of the programme should be bigger (over $10 billion), considering the upcoming debt repayments,” the research house stated.

With IMF’s support, other lending agencies will also feel comfortable in providing funding to Pakistan. There are news reports that the World Bank and the Asian Development Bank (ADB) will extend their support to Pakistan to the tune of $6-8 billion once Pakistan enters the IMF programme.

Pakistan got a sigh of relief after around $8.5 billion came from Saudi Arabia, the United Arab Emirates (UAE) and China. Due to these, Pakistan’s foreign exchange reserves rose from a low of $7.2 billion in December 2018 to $10.2 billion last month (April 5, 2019).

However, these have been on the decline for the last four weeks and are now down to $8.8 billion (less than two months of import cover). Foreign exchange reserves net of swaps are at low levels at $1-1.5 billion, considering $1 billion a month in upcoming debt repayment.

IMF programme by June

“Given the current discussions with the IMF team and recent changes in key government positions, we are of the view that Pakistan will likely enter the IMF programme by June,” it said.

Topline Research said it expected the IMF programme to be approved this month or next month. It estimated the bailout package to be an Extended Fund Facility (EFF) for a period of three years.

Stocks to rally post-IMF programme

Pakistan has a long history of signing IMF programmes. Following the last three IMF programmes, the benchmark KSE-100 index rallied on an average 37% in the 12 months post-IMF deal.

“We attribute the improvement in market sentiment during the IMF programme to an improved external account situation on receipt of foreign flows and stabilisation on the macroeconomic front,” it said.

“Now, based on the assumption that Pakistan will get a new IMF loan soon, we are maintaining our index target range of 40,000-45,000, providing total return of 12-26% from here.” As expected, the newly appointed adviser to the prime minister on finance is forming his own team. Over the last few days, the government has appointed a new central bank governor, Reza Baqir, who has worked with the IMF for the last 18 years and was last heading the IMF mission in Egypt.

Baqir has overseen implementation of the current IMF programme in Egypt, which was approved in November 2016 and will end later in 2019. “The Egyptian programme has two key contours – free float of currency and reduction in energy subsidy,” it said.

The government has also recently appointed Shabbar Zaidi, a seasoned tax consultant and former partner of AF Ferguson and Co, as head of other key institution, the Federal Board of Revenue (FBR). “These two changes, we believe, are a desperate move to get the IMF package and implement tough economic reforms,” the research house added.

Published in The Express Tribune, May 9th, 2019.

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https://tribune.com.pk/story/1968786/2-rupee-fall-interest-rate-hike-expected/

PTI government needs to stop bitching and blaming past governments now and start showing its own performance. You cannot keep blaming others forever for your own stupidity and incompetence. Your FM was sacked not because of the past governments' mistakes/policies but rather because of hardheadedness, incompetency, shallow thinking/understanding of the economics, and lack of a credible policy. Show us what you have done so far to improve the economic aspect of the nation. Like many other fronts, you're failing to deliver and cannot justify that by blaming others. Stop that bullcrap and show the results.

 

[nahtanbob]

So if we had to get in the IMF program, what was the use of getting support from close allies and keeping the market uncertain for 10months? Politically also a bad move as 1) the honeymoon period of pti govt is almost over in which these tough decisions could have been taken 2) the brunt of these changes could have been rightly blamed on PMLN and previous govts, but now it will all be on PTI
A Punjabi saying comes to mind, which literally translated to English: 100 shoes 100 onions!

I think Pakistani Army was trying to negotiate a bailout by getting China and USA into a bidding war
It never happened

 

[Hiraa]

I was thinking maybe it will stabilize to 150 but it seems it really will go to 165rupees by end of year.

 

[maithil]

165 at the end of year, will be good news. Dollar will touch 175 most likely.