Nilgiri
BANNED
- Joined
- Aug 4, 2015
- Messages
- 24,797
- Reaction score
- 81
- Country
- Location
As explained earlier, the irregularlities are mainly because of the fact that it was anchored down previously and kept at 140Rs for a dollar when real value was in the 160s. Now that free floating is allowed it is going up toward that real value fluctuating up and down at times. Will steady once its there and then in 5 - 6 months i see it coming down gradually, under free float, to 140/150 mark
These are more the argument for the positioning of the level of exchange rate...and PTI admin coming to reality regarding that compared to previous admin policy on it.
A pure free float would see much wilder swings and also lot more resolution in the exchange rate movement. It's still mostly a managed peg, just the peg is allowed to move to different level now and there is some greater lattitude given for its acceptable range.
But given its no longer a robustly fixed tight peg (like say China has done for long periods)....it is somewhat just a matter of do you see a glass half full or half empty kind of thing.
Also what do you see structurally prompting in 5-6 months, that too by pure free float pressure, an appreciation back to 140-150 level? That would essentially mean you are arguing 140-150 is the natural structural equilbrium for the PKR-USD in the mid term?....but I feel it will take a year or two at least to even see what the net effect of any structural reforms + policy actions will be as they relate to loan/imports vs exports + remittances and investment.