In a first in four years, dollar falls by Rs5.36 in interbank market [Update Post #31]

[WebGuru]

KARACHI: The country’s stock market is bearing the brunt of political uncertainty. The KSE-100 Index – a benchmark for market performance – has undergone a tumultuous ride this year with the ongoing Panama case making investors jittery.

However, Finance Minister Ishaq Dar believes that slide of the rupee, which lost 3.2% in value against the US dollar on Wednesday, is also due to the same reason. In a statement, Dar said that certain elements were taking advantage of the uncertain times in Pakistan’s politics and exploiting it as an opportunity to make money in the foreign exchange market.

Nevertheless, on Wednesday, the Pakistani rupee suffered its biggest one-day loss since 2008 and closed at its lowest value in three and a half years.

“This is an earthquake for the currency market and badly shakes investor confidence,” Forex Association of Pakistan President Malik Bostan told The Express Tribune.

Currency dealers say there is panic because of uncertainty.

“What is creating more confusion is that Finance Minister Ishaq Dar repeatedly said that the government would maintain the exchange rate. And now we see this sudden rise in the value of dollar,” he added.

Despite the situation, Bostan said that there was market talk that the government wanted to devalue the rupee, but nobody knew this could happen in just two hours. Just after the sudden fall in the rupee value, eyes turned towards the State Bank of Pakistan (SBP).

Dealers were wondering whether the sharp decline in the rupee value was the result of speculation or did it have the government’s blessing.

An analyst at Paracha International Exchange Pvt Limited commented that the sudden fall in the rupee value in just two hours caused panic in the market.

Clearing the air

Unexpectedly, the SBP issued a press statement supporting the fall in the value of the rupee. “The current exchange rate is broadly aligned with the economic fundamentals,” according to the SBP statement issued on Wednesday.

The move was surprising because the central bank has been supporting the rupee against the dollar by intervening in the open market during the last few years of this government.

The finance minister has been a big supporter of a strong rupee and since taking office in 2013, the PML-N has been trying to keep the rupee stable. However, his stance has been bitterly opposed by exporters who think artificial support to the rupee is creating problems for Pakistan’s exports at a time when regional competitors have devalued their currencies to support their exports.

Analysts say the government wanted to continue its stable rupee policy but it has recently come under severe pressure to devalue the rupee because of sharp rise in imports and decline in exports.



Source: https://tribune.com.pk/story/1451140/worst-one-day-fall-rupee-since-2008-dealers-panic/

 

[Couch Cricketer]

Our currency has been kept artificially strong that has almost destroyed most of our export industries. In reality it should be Rs123-125 and from what I have heard over the next year it is going end around that

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[Slog]

its being kept artificially strong

in fair market it would be around USD1KR125 exchange rate

 

[Syed1]

Wow RS 125 is going to SUCK!!


The only people its going to help is the exporters, meanwhile inflation will sky-rocket.



Government is more interested in saving Sharifs rather than doing actual work.

 

[Slog]

Wow RS 125 is going to SUCK!!

.

haha its going to suck for me personally big time as ill be going for masters by then :/

 

[Syed1]

haha its going to suck for me personally big time as ill be going for masters by then :/

Which university are you eyeing? Harvard Business School?

 

[Slog]

Which university are you eyeing? Harvard Business School?

inshallah

why not?

 

[JaDed]

Didn't Pakistani Rupee have any issues during 2013?

 

[Couch Cricketer]

I know for a fact that Ishaq Dar gave the go ahead to the statebank to let Pakistan RS fall now he is trying to score political points. Most people don't realize gradual decrease is actually helpful but because Ishaq Dar and co havecvkept our currency strong artificially it destroyed many export businesses now letting it fall won't help as the factories etc have already closed and left Pakistan. And the billions of dollars they have borrowed will keep becoming in terms of rs

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[Syed1]

KARACHI: The currency market remained volatile on Thursday as the dollar fell sharply against the rupee and kept moving within the new range given by Finance Minister Ishaq Dar.

The dollar was traded up to Rs108.20 in the morning, but closed at Rs105.50-106, said bankers and currency dealers.

Although Mr Dar was highly critical of the situation a day ago, he now seemed to have accepted two per cent devaluation instead of 3.1pc.

“Banks traded the dollar at various prices, but (the rate) did not exceed Rs107 after the morning session,” said a senior banker while noting the finance minister’s statement that the value of dollar should not exceed Rs107.

Currency dealers said the interbank market started at Rs108.30, but soon the dollar started falling against the rupee and dropped to Rs105.50 around midday. It rose again as the dealers traded it up to Rs107.

They said the rift between the SBP and the Ministry of Finance produced a mixed reaction in both interbank and open markets. But banks adopted a cautious approach and preferred to remain within the new range of Rs105-107.

The banker said dollar trading on Wednesday was affected by huge payments relating to the acquisition of NIB Bank by MCB Bank.

“The market panicked after huge buying was made for the payment against NIB Bank,” said Atif Ahmed, a currency dealer. He added that the payment amount was about $150 million.

Currency dealers said a large payment of $100m-150m was mishandled as a single bank was asked to carry it out. It triggered speculations that devaluation had been allowed.

Currency dealers in the open market said they followed the interbank market and did not let the rate cross Rs107. The open market witnessed a dull day on Thursday while no public buying was noted on Wednesday.

“There was no panic in the public as it did not buy dollars while selling dropped by 95pc. We deposited about $5m in interbank on Wednesday as no buyer was available,” said Malik Bostan, president of the Forex Association of Pakistan. No data was available for Thursday.

He said public buying was nominal across the country on Thursday, which kept the market calm for the whole day.

https://www.dawn.com/news/1343667/rupee-gains-ground-against-dollar

 

[Syed1]

What is going on... worst fall in one day since 2008 and then it springs back up to nearly the same level. I do not understand these matters a great deal but I'm 100% sure that some folks made a huge killing based on this sudden rise and fall.

 

[Syed1]

[MENTION=133760]Abdullah719[/MENTION] [MENTION=134551]Muhammad10[/MENTION]


Guys can you please update the thread title based on post #10

 

[Varun]

What is going on... worst fall in one day since 2008 and then it springs back up to nearly the same level. I do not understand these matters a great deal but I'm 100% sure that some folks made a huge killing based on this sudden fall and rise.

Forex traders, most likely.

 

[last_knight]

What is going on... worst fall in one day since 2008 and then it springs back up to nearly the same level. I do not understand these matters a great deal but I'm 100% sure that some folks made a huge killing based on this sudden rise and fall.

That's what Imran Khan said last year.As of now, PM is a serious security threat.

This currency fluctuation is nothing but just a cleverly manipulated threat to JIT & SC that any verdict against PM will create chaos across social and financial fronts. But it won't. Just a bluff.

 

[JaDed]

Forex traders, most likely.

And they will also be losers,in such scenarios its usually the politicians that benefit,IIRC without any source Chidambaram's son was involved in something similar.

 

[Pakpak]

[MENTION=138254]Syed1[/MENTION], a bank with run by Nawaz apparently bought a lot of a currency to send a message that removing them will cause a catastrophic effect on the nation is what the channels and analysts are saying. I was listening to a Karachi economy analyst and he pretty much said the same.

 

[Slog]

PKR has depreciated by over 25% against the US Dollar this year!

It is almost 130 to a dollar now

Ridiculous

 

[the Great Khan]

Army's fault..they did this..Dar zindabaad.

 

[Slog]

Army's fault..they did this..Dar zindabaad.

Pakistan is really screwed right now no matter how you look at it man. Honest people can't survive with such crooks at the top. I'm out!

 

[Slog]

its being kept artificially strong

in fair market it would be around USD1: PKR125 exchange rate

So this is what I said barely a year ago. And I was right on the money

Unfortunately the way the Pakistani economy has gone in past year with a spiralling and out of control balance of payments crisis (with little hope of significant exports increase despite devaluation) coupled with impending major debt servicing, a fair USD: PKR according to my calculations (well me and a couple of friends) is around USD 1 to PKR 145-150.

PML-N was kind of lucky that oil was so low for most of its tenure that it was able to have a great degree of control on the oil import bill. But with oil increase and PML-N having done absolutely jack all to address the other outstanding issues in the past three years, our economy is screwed

Only hope would be for some 'friendly country' to inject a couple of billion dollars like Saudis did in 2013. But I doubt we have any friends who would do that

 

[Mian]

A prediction by Asad Umar 5 years ago

 

[Mian]

It is almost 130 to a dollar now

Ridiculous

Experienced team of PMLN!

 

[Varun]

Only hope would be for some 'friendly country' to inject a couple of billion dollars like Saudis did in 2013. But I doubt we have any friends who would do that

And do you really think that money is 'free'? Saudi Arabia are 2nd only to the USA to having the max strings attached with their dealings. In Pakistan's case, it is no doubt an overpowering influence over their foreign policy, along with erecting a few dozen Wahabi mosques around town.

 

[Slog]

And do you really think that money is 'free'? Saudi Arabia are 2nd only to the USA to having the max strings attached with their dealings. In Pakistan's case, it is no doubt an overpowering influence over their foreign policy, along with erecting a few dozen Wahabi mosques around town.

Obviously I know that and is why I put the friendly country in quotations

 

[mmkextreme_1]

While I was in Pakistan last year, I told my family members the same thing. The value at the time was 106-107, and I thought the rupee was falsly inflated. Real value should have been around 125-130, now its there.

Looks like it could climb higher, sucks! Yet, people will still vote for PMLN! Need better economic advisor to guide the economy.

 

[Varun]

Looks like it could climb higher, sucks! Yet, people will still vote for PMLN! Need better economic advisor to guide the economy.

Why, a weaker currency benefits the domestic export market. Indian IT has used this 'trick' for over a decade.

 

[Extra_Cover]

Why, a weaker currency benefits the domestic export market. Indian IT has used this 'trick' for over a decade.

What about the billions in loans which are denominated in foreign currencies? Wouldn't a depreciating currency widen the deficit and the borrowing country will end up paying more than borrowed or utilised?

Pakistan economy needs real influx of investments to stabilise the economy. The only real influx of capital can be done by overseas Pakistani who see Pakistan as investment opportunity. The problem is an overseas Pakistani will be reluctant in spending or investing in Pakistan if the top government is corrupt and he/she believes that if they invest they would be duped by corruption and lose their investment. Imran, on the other hand is popular among this overseas Pakistani group and have successfully pooled their investments and ended up making stable tangible assets like SKMH, Namal, etc. I have hope if Imran comes into power he would rejuvenate the interest of overseas Pakistani and bring much needed investment capital back into Pakistan.

 

[Slog]

Why, a weaker currency benefits the domestic export market. Indian IT has used this 'trick' for over a decade.

Pakistan has racked up unbelievable amount of foreign currency loans in the PML-N Goverment tenure

 

[Syed1]

Yeah Allah iss mulk ki madad farma.....




And some jahils want to again vote for the Sharif khandaan.... some even have come on here and said that Maryam is their leader now. Ghulam ibne ghulam ibne ghulam. Now Maryam's son is entering politics these jahils now have another member of the Sharif khandaan to worship. They keep crying about jamhooriat but what kind of jamhooriat is this that only a person from a single family is allowed to run for office.

 

[mmkextreme_1]

This is beyond pathetic

I really hope that the rupee does gain ground back in the future.

 

[Abdullah719]

In a first in four years, dollar falls by Rs5.36 in interbank market

KARACHI: In a first in four years, the US dollar shed Rs5.36 against the rupee on Monday in the inter-bank market, falling to Rs122.5.

The greenback closed down Rs2.82 at Rs125.4.

In the open market, the foreign currency fell by Rs2, to trade at Rs118 (buying) and between Rs120-122 (selling).

As the market opened, the Pakistan Stock Exchange (PSX) also witnessed a positive trend. The benchmark KSE-100 index gained 314 points to reach 43,100 points.

It closed up 770 points at 43,556 points.

The positive economic indicators are considered to be largely driven by what investors consider the return of political stability following the July 25 polls.

The national debt will decline by Rs450 billion as the rupee consolidates gains against the greenback.

In a comment to Geo.tv, market analyst Samiullah Tariq said, "News of inflows from multiple channels including the credit line from the Islamic Development Bank (IDB) has created a positive sentiment about the balance of payments. This has resulted in a drop in dollar price in the interbank market against the rupee."

As the future outlook becomes clear and investors gain confidence about the outcome of their future investments, the market will continue to incorporate the positive sentiment in trading activities, Tariq said.

On Saturday, the US dollar had depreciated by Rs4 in the open market. The positive development was attributed to the end of political uncertainty following elections.

In the past week, the greenback's price had soared as high as Rs130 as Pakistan moved to its second democratic shift of power amid security threats and terrorist attacks in different parts of the country.

Pakistan's economic fundamentals had deteriorated ahead of the July 25 general election. Since December, the rupee had cumulatively shed over 21% of its value after the State Bank of Pakistan reportedly abstained from intervening in response to the pressure exerted by a widening current account deficit.

https://www.geo.tv/latest/205346-in-a-first-in-four-years-dollar-falls-by-rs536-in-interbank-market

 

[Abdullah719]

What's the outlook for the next couple of months? Is the dollar expected to fall further or rise again?

 

[shortbread]

What's the outlook for the next couple of months? Is the dollar expected to fall further or rise again?

Continued recovery of the US economy, followed by more positive data predicted and the Fed expected to announce interest rate hikes this year; all of this signals a strengthening US dollar.

 

[Syed1]

PKR to USD dropped from nearly 130 to around 117. Abhi tou boy ne half bhi nahi othaya

 

[Xoib]

PKR to USD dropped from nearly 130 to around 117. Abhi tou boy ne half bhi nahi othaya

it has nothing to do with PTI.

Hopefully in the long run through imrpvement in economic policies and better balance of trade our exchange to US$ will be close to Indian Rupee