Dollar continues to make historical high against Pak rupee as it further appreciated to new position at 109 against weakening Pak rupee in the open market today. Govt & SBP seem criminally indifferent over this issue whereas It would certainly open floodgates of ever high inflation.


Asad Umar of Pakistan Tehreek-e-Insaf (PTI), who took oath as a member of the lower house of parliament, said on Tuesday “The government-IMF agreement has raised many doubts in the minds of people who want the agreement should be made public,” He predicted that the Pakistani rupee would be devalued further to 127 against dollar.He said the government had printed notes worth Rs636 billion in a period of just two months which would result in an unprecedented increase in inflation whereas the last government had printed Rs500 billion one year."


What is your input, guys

When our respected FM Dar was presenting this formula of eliminating circular debt by further borrowing form Internal and External sources, he should have known the consequences. Moreover the farce of Indirect taxes which he introduced happily, would certainly not have a happy ending. This increasing Inflation is just a beginning. Get ready for Stagflation, for unemployment coupled with inflation.

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Everyone Dies But Not Everyone Lives!

They have printed currency, in order to adjust the circular debt. You are right, Rupee will devalue even more!

Depreciate is the correct word.

There is no doubt about the agreement between IMF and present Government of Pakistan. This agreement brought nothing but only disaster in Pakistan. PML-N has decided to sell some of the Golden Bird Departments of Pakistan like PIA and Steel Mill of Pakistan and the ads for their privatization have already been published. Dollar is increasing day by day. Yesterday, it touched the highest Rs.109/U$D in the history of Pakistan where as today, it increased up to Rs.110/U$D. Value of Pakistani rupee is only one in the World which is decreasing day by day at this rate. Besides the fact, We have to bear all these burdens because this drastic increase in dollar nothing really means to our political leaders.

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Whenever I hear, “It can’t be done,” I know I’m close to success.

Our respected FM Dar is an " Accountant " in simple words " Munshi ", ho does not know the complexities of economy. We need an expert " Economist " as FM.

Quote:

Originally Posted by VetDoctor Our respected FM Dar is an " Accountant " in simple words " Munshi ", ho does not know the complexities of economy. We need an expert " Economist " as FM.

These people are knowledgeable yet dishonest & deceitful. Loyalty is required to run this country.

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When you try, you risk failure. When you don’t try, you ensure it.

plz teach me that how printing new notes or rupies will increase value of dollars.?

Has anybody got solution of this problem? That is which steps should be taken by govt. to increase value of our currency against dollars?

Money only holds value because there are goods and services available to buy with that money. It is the goods and services that create a value for that money. Coconut water would be more valuable on a treasure island than kilos of gold. In that circumstance, it’s not the value of coconut water that has increased, but the diminished value of gold that is being reflected. The fewer goods and services available, the lesser the value of money – even if it is a pile of gold.

Pakistan currently produces cotton, rice, fish, fruit, vegetables, pulses and much more. These are the goods that add value to the rupee. The rupee is worth more as these goods produced in Pakistan increases. Instead of selling these goods in Pakistani rupees, which would create a ‘demand’ for the rupee in the international exchange market, the State Bank of Pakistan settles the export payments in US dollars, called the balance of payment (BoP). Any country that imports from Pakistan would have to otherwise buy rupees from the international forex market to pay for Pakistani products. This may not sound too trivial but it takes the ‘value’ from the rupee away and transfers it to the US dollar (think petro-dollar). The rupee becomes like gold on the Treasure Island – not much left to be bought with. A pretty sad thought that the very country that grows the best rice, doesn’t get to feed its own citizen that grow it.

Currently the State Bank of Pakistan uses the dollar and euro to settle its BoP account. One should realise that the value of the dollar and euro is not static. Due to the financial crises and socialisation of financial losses in the banking sector, American and European central banks have been running their printing presses on turbo mode. The more the central banks print or issue electronic credit to the markets, the more these currencies lose their value. By using foreign currency, not only does Pakistan’s economy import American inflation, but it also results in the devaluation of the rupee.

So why the dollar?

This goes back to the Bretton Woods Agreement of 1944 when the dollar was redeemable by gold. The American central bank could not print dollar bills if it didn’t have the gold to back up the bills with. Eventually the ‘gold window’ was closed in 1971 which should have marked the end of the Bretton Woods Agreement but it didn’t.

Why should a sovereign country use foreign currency when that currency can be devalued at the will of a foreign central bank, as the dollar is no longer backed by gold? The whole idea goes against the concept of sovereignty. To add insult to injury, IMF lends loans in dollars to fill the BoP gap – loans that have to be paid back with interest. The interest has to be earned by Pakistan by exporting more of its goods. This is a double-edged sword; interest sucks the value out of imports and dollar inflation dilutes the value of exports.

The State Bank of Pakistan should demand payments for its exports to be settled in rupees. However, for the general public to see the fruits of its labour, the federal government needs to stop printing rupees and balance its budget. Otherwise, the fruits of labour – that were saved from the international bankers – would be stolen by the federal government of Pakistan via inflation.

It is high-time the ministry of finance takes notice of these issues as Pakistan has already passed its point-of-no-return towards bankruptcy. Let’s save whatever there is left to be saved for future generations to come.

Source:How the mighty dollar weakens the rupee

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To succeed,look at things not as they are,but as they can be.:)

If it is so simple that if State Bank of Pakistan shifts the BoP ( Balance of Payment ) from foreign currency-dollar to local currency-rupees,,, Rupee would get stable!!! Then what is stopping SBP from doing this???
Are people at the helm of affairs in SBP not properly qualified or intelligent enough to understand this mechanism?
OR
do they have their own vested interests?
OR
they are under pressure from any corner!!!