US dollar hits all-time high of Rs142 in interbank market

[AyanRay]

Someone has to get his hands dirty to clean the house and IK is doing just that. I think it's a good move, but it could have been done in a systematic gentle way. This sudden bursts of devaluation will affect everyone.

China has gained a lot by keeping its currency undervalued, dont know why India and Pakistan be so emotional about exchange rates. Let the rate remain low for few months and then FDI will start flowing in when they realize its cheaper to produce goods in Pakistan

 

[Champion_Usmani]

https://twitter.com/x/status/1068377718952210432

 

[BHarwana]

https://twitter.com/x/status/1068272345922588673

Yep as suspected state bank is buying dollar from market to increase foreign reserves.

 

[GHALIB]

Hmm interesting crude oil prices are low so why is dollar dropping. Seems like artificial drop so this means is state bank buying dollar?

So india was buying dollar when they raced to 74 rs per dollar?

 

[BHarwana]

Someone has to get his hands dirty to clean the house and IK is doing just that. I think it's a good move, but it could have been done in a systematic gentle way. This sudden bursts of devaluation will affect everyone.

China has gained a lot by keeping its currency undervalued, dont know why India and Pakistan be so emotional about exchange rates. Let the rate remain low for few months and then FDI will start flowing in when they realize its cheaper to produce goods in Pakistan

It is a good thing we are devaluing the currency and making exports cheap and increasing foreign reserves.

 

[Canuck786]

He predicted it long ago. Insider information?

 

[GHALIB]

https://twitter.com/x/status/1068272345922588673

Yep as suspected state bank is buying dollar from market to increase foreign reserves.

What about saudi dollar?

 

[BHarwana]

So india was buying dollar when they raced to 74 rs per dollar?

Nope India was facing out flow that is why indian currency was falling. In Pakistan's case our trade deficit is shrinking and currency is devaluing instead of rising this means govt using fiscal tools to adjust to some desired scenario.

 

[Champion_Usmani]

https://twitter.com/x/status/1068272345922588673

Yep as suspected state bank is buying dollar from market to increase foreign reserves.

The rise in dollar comes owing to the widening current account deficit and International Monetary Fund's (IMF) suggestion to the government to realign the rupee with market fundamentals to access funds.

Further, the State Bank of Pakistan is set to announce its monetary policy today and the market expects an increase in the interest rate which could be reflecting on the dollar rate. The current policy rate is 8.5%.

The latest devaluation of the rupee has taken the total debt owed by Pakistan to Rs760 billion.

There are slim chances of the dollar reducing by any significant amount. It is expected to hover between Rs140 and Rs150 in the coming weeks because the International Monetary Fund has signalled further devaluation in the rupee as one of its bailout conditions.

Inflation will increase, and so will gas and petrol prices. Transport fares will also increase as a result.

 

[valkyr_96]

very bad now our debts will become more higher I think govt moving towards imf bailout as imf also demanded rupee devaluation to 150 finance minister should resign if he is unable to understand how to control economy

if we dont depreciate than we have to forgo the dollar earned from remittance and exports to support the price......something we cannot do and should never be done. The reason why IMF goes for depreciation is simply because of the J curve effect. It is a surefire way to kick start exports to make them cheap and the imports expenses. This is where elasticity comes in. Is the demand for imports inelastic or elastic? The same is not the case for our exports because we are not competitive on the basis of products but on its price. Pakistan might be receiving grants, loans and investments but presenting public debt is dollar terms is a gross violation of financial principals. Please people educate yourself.Even if Pakistan does not go to IMF it can still follow the J curve tactic.

https://twitter.com/x/status/1068272345922588673

Yep as suspected state bank is buying dollar from market to increase foreign reserves.

What are they buying the dollar with? Please don't say rupees.

 

[BHarwana]

The rise in dollar comes owing to the widening current account deficit and International Monetary Fund's (IMF) suggestion to the government to realign the rupee with market fundamentals to access funds.

Further, the State Bank of Pakistan is set to announce its monetary policy today and the market expects an increase in the interest rate which could be reflecting on the dollar rate. The current policy rate is 8.5%.

The latest devaluation of the rupee has taken the total debt owed by Pakistan to Rs760 billion.

Trade deficit is shrinking so there is no out flow which means this is artificial. If your foreign reserves are rising and dollar is also rising that means govt is stocking dollar and not injecting it into economy. So this means govt wants to utilize the dollar in open market towards trade and store its reserves. It is a good policy if you can keep oil price low along this which means production cost will remain low. In my calculation oil price should also increase by few rupees let's see what happens there.

 

[valkyr_96]

The rise in dollar comes owing to the widening current account deficit and International Monetary Fund's (IMF) suggestion to the government to realign the rupee with market fundamentals to access funds.

Further, the State Bank of Pakistan is set to announce its monetary policy today and the market expects an increase in the interest rate which could be reflecting on the dollar rate. The current policy rate is 8.5%.

The latest devaluation of the rupee has taken the total debt owed by Pakistan to Rs760 billion.

There are slim chances of the dollar reducing by any significant amount. It is expected to hover between Rs140 and Rs150 in the coming weeks because the International Monetary Fund has signalled further devaluation in the rupee as one of its bailout conditions.

Inflation will increase, and so will gas and petrol prices. Transport fares will also increase as a result.

Please suggest an alternative?

 

[BHarwana]

@Champion_Usmani don't get angry bro but IMF not coming back till January so forget for now.

Trade deficit is declining and foreign reserves increasing that means economy is very healthy. If oil is kept at current value this will not translate into inflation and exports will become cheap. Good policy by PTI.

https://twitter.com/x/status/1061582320573079553

I like PTI using china policies now in economy.

 

[Yaseen1]

even if exports increase if we are exporting them on cheap rates it is actually decreasing profitability of exporters which means less dollars are earned by him as compared to competitors and machinery parts which he import also become expensive some of our imports are inelastic which are necessary and will lead to inflation and it will decrease demand of our rupee and people will prefer to keep their savings in dollars instead of rupee which will further cause devaluation and decrease in foreign reserves of SBP

if we dont depreciate than we have to forgo the dollar earned from remittance and exports to support the price......something we cannot do and should never be done. The reason why IMF goes for depreciation is simply because of the J curve effect. It is a surefire way to kick start exports to make them cheap and the imports expenses. This is where elasticity comes in. Is the demand for imports inelastic or elastic? The same is not the case for our exports because we are not competitive on the basis of products but on its price. Pakistan might be receiving grants, loans and investments but presenting public debt is dollar terms is a gross violation of financial principals. Please people educate yourself.Even if Pakistan does not go to IMF it can still follow the J curve tactic.

What are they buying the dollar with? Please don't say rupees.

 

[Champion_Usmani]

Sudden devaluation of local currency against the US dollar was witnessed in interbank trading on Friday morning as the greenback hit an all-time high of Rs144.

Sources told DawnNewsTV that the sudden rise of Rs10 in the value of the US dollar is based on the government's commitments to the International Monitory Fund (IMF).

The US dollar, which was being traded at Rs134 yesterday, opened higher at Rs142 on Friday while the local currency further devalued by Rs2 to Rs144.

Zaffar Paracha, General Secretary of the Exchange Companies Association, told DawnNewsTV that the sudden devaluation of rupee has created a panic in the market. He said that the traders are expecting the open market to open at around Rs143 to Rs144.

He said that the devaluation was expected due to the current dialogues between the government and the IMF. "It seems a continuation of the IMF's condition for a bailout package," he added.

Paracha demanded of the government to properly announce the devaluation to end the panic among currency dealers.

Another analyst Ahsan Mehnati said that the move was unexpected for the interbank market as the country has not yet entered the IMF programme. "Owing to the devaluation of the local currency in the recent past, the government was being expected to discourage the rupee devaluation," he added.

"It is not good news for Pakistan," he said, adding that it will also increase the import bill of the country.

According to Mehnati, the IMF was asking the government to bring rupee value at Rs145 per dollar and the interest rate at 10.5 per cent as a precondition for a bailout package. "It seems that the government is complying with the IMF's demands," he concluded.

https://www.dawn.com/news/1448575