Falling value of rupees- Alarming Situation

The dollar reached the lowest level of Rs 124.5 in Interbank and Rs 124.5 in the Open Market

The dollar reached the lowest level of Rs 124.5 in Interbank and Rs 124.5 in the Open Market

News Time

In its previous columns, it was predicted that the value of rupees would decrease in comparison to the dollar at the coming time. According to the economists, the Pakistani rupee was trading at its highest value and former finance minister Ishaq Dar placed the rupee artificially at Rs 98.25 for two years after the government was held in June 2013, whenever the dollar demand was increased in the market, the State Bank’s intake was sought by the dollar and the dollar was supplied to the desired dollar market. However, in the third year of June, the value of rupees was reduced to 101.80 rupees and trade remained at $ 104.80 for June 2017, in this way, former Finance Minister Ishaq Dar made the value of Anna in his four-year period the value of rupees artificially placed at 98 to 104 levels, which was 14 to 15 percent higher than its original value while the IMF report, the value of rupees was given 10 to 15 percent more than its actual value about which I mentioned in my previous column.

After leaving Finance Minister Ishaq Dar in December 2017, when Rana Afzal was appointed Minister of State for Finance and Dr Miftah Ismail Advisor. So, the 4.7 per cent drop reached a level of 112 to 112, which led to the increase in the value of Euro and Pound other external currencies. The policy of Dr Miftah Ismail was to bring the dollar to its original value for which he was more likely to reduce the value of rupees. And therefore, on June 29, 2018, the dollar reached the lowest level of Rs 124.5 in Interbank and Rs 124.5 in the Open Market. Thus, in the past 5 years the value of dollar decreased by about 23.50 rupees in which only the last six months decreased by 18 rupees and from December 2017 to June 2018, the State Bank declined 3 times in value due to the contradictory government policies on the value of rupees, foreign exchange was severely affected in 5 years. I am personally against rupees of D Valuation but I am a real value of money because in the past one did not see the good effects of D Valuation.

Whenever the government reduced the value of Pakistani rupees, the exporters took advantage of external buyers into the form of a discount and domestic export has not increased significantly, but if the value of rupees is kept in the market according to demand and demand and the State Bank does not interfere, it is a better strategy. In order to increase exports, the government needs to maintain the competitiveness of exporters instead of the DA. In which electricity and gas competing rates and exporters’ sales tax refunds are headquartered. External debt not only increases from D Valuation. For example, by reducing just 5 rupees in value of rupees, our external debt will increase by Rs 425 billion. In addition, the value of petroleum products and raw materials imported by the increase in the dollar will increase, which will increase inflation. This can cause a stormy storm in the country, so it is better to leave the determination of rupee value on market forces that will be helpful in our export.

In the first 10 months of the current fiscal, the current debt deficit has exceeded $ 14 billion, which has gone twice a year compared to the previous year. Although the domestic export has increased by 13 percent in the last few months, however, we face the $ 34 billion trade deficit. External loans have risen to $ 96 billion at the highest level, out of which we have to pay around $ 5 billion this year. For which the government has temporarily requested a $ 2 billion dollar deposit from China in April 2018, the Government had acquired a short-term loan of more than one billion dollars from China’s commercial banks. As an economist student, I review that our economy is increasing dependent on China which includes new loans from China even though it is not in the policy of China to give financial loans to Pakistan.

On June 14, 2018, India’s gold reserves have dropped from $ 24 billion to $ 16.79 billion. This includes State Bank of America $ 10.26 billion and $ 6.53 billion in commercial banks’ deposits. Due to continuous reduction in reservoir reserves, pressure on rupees is severe. External buyers in the stock market are expanding their investments due to political impunity. Last year, external investors have sold $ 728 million and 266 million shares so far due to which the stock market is not getting out of the market but hopefully external investors from the rupee’s extra de-sale will invest in the Pakistan Stock Exchange again. International capital market due to lack of currency deposits and rupee value of Pakistan. The Euro-issued Euro and Sukk bonds of Pakistan, which have to be paid in 2027 and 2036, have reduced its original price from $ 100 per bond to $ 85 and 82 respectively. While few years ago, it traded premiums at Bonds International Market. A government expectation after the Supreme Court gives green signal to the new amnesty scheme Government may get about $ 3 billion a monetary exchange under the scheme to document the assets abroad or bring them back to the country. This will help support foreign exchange reserves.

Former Governor State Bank and Caretaker Finance Minister Dr. Recently Shamshad Akhtar was a detailed meeting with Amnesty Scheme in Karachi. It was estimated that he was not in favor of the intervention of State Bank for the value of rupees. The interim government has a short mandate in which it can not take important policy decisions because their main objective is to make a clean and transparent election in the country. But the upcoming new government advises me to take the right priorities in the first 100 days to compete with the country’s economic challenges. This will reduce emergency account deficit and cost reduction, exports, exports and foreign exchange reserves. Financial Action Task Force (FATF) has included a gray list to Pakistan in its recent Paris meeting to prevent money laundering and terrorist financing. After which we will now have to negotiate tough conditions to borrow from IMF.

Advertisement

No comments.

Leave a Reply