DOLLAR TO RUPEE PREDICTION PROFESSIONAL

In my opinion, Dr Reza Baqir will not try to influence the direction of the rupee but the SBP will sell dollars to scare away speculators if and when speculators jump in.

DOLLAR TO RUPEE PREDICTION PROFESSIONAL

The good news is that we have a highly competent professional as SBP Governor. While these cartels are bent upon seeking вЂrentвЂ™ we need to move from вЂrent seekingвЂ™ cartels to an export-led competitive economy. In a nutshell, a whole host of cartels-including electricity, sugar, fertiliser and automotive-have been holding our economy hostage. We are trapped in a vicious cycle-and the only way out is structural reforms. That means a falling rupee will usher in another round of price increases. We import petrol, diesel, wheat, sugar, cotton, fertilizer, machinery, iron, steel, tea, chillies, palm oil-and the price of electricity is tied to the dollar.

If the current trajectory continues the rupee-dollar parity could test the Rs200 mark in the next two years.ДЄ falling rupee means вЂimported inflationвЂ™. The pressure on the rupee, it seems, is relentless.

In the next 12 months, the State Bank of Pakistan (SBP) has to pay out $15 billion. Since May 2021, over the past four months, the rupee has lost an additional 10 percent. WhatвЂ™s the future of the rupee? In 2018, when the PTI formed the government, a dollar was worth Rs123. ThatвЂ™s an additional downward pressure on the rupee. The situation has since reversed-Afghans are now buying dollars on the Pakistani kerb market. The Biden Administration froze $9 billion, the IMF suspended $460 million, the World Bank halted $5.3 billion, the EU suspended $1.17 billion in aid and the Afghanistan Reconstruction Trust Fund (ARTF) terminated $12.9 billion worth of commitments. ThatвЂ™s a billion dollars worth of supply into Pakistan. Before the Taliban takeover Afghanistan used to be floode with dollars and, according to money market sources, a billion dollars a year spilled over into Pakistan. In the real world, it gets a lot more complicated than that when investors begin to calculate the real rate of interest (which is the nominal rate less inflation).Д¬urrently, the rate of interest in Pakistan is around 7 percent while the rate of inflation is in the double digits meaning that the real rate of interest is in the negative (thus a downward pressure on the rupee).

Generally speaking, a higher rate of interest offering lenders a higher rate of return relative to other countries tends to attract foreign capital and cause the rate of exchange to rise. The rate of interest also has an impact on the rate of exchange. The differential in the rate of inflation can roughly be equated to the quantum of downfall in the value of the Pakistani rupee. From the real world, the rate of inflation in Pakistan has been hovering around 10 percent while the same in the US has been around 4 percent. The rate of inflation, for instance, plays a major role. In the real world, the determination of a currencyвЂ™s rate of exchange is a much more complicated affair. Over the 37-month PTI-period beginning in 2018, the Pakistani rupee has lost 36 percent of its value against the dollar. Over the 5-year PML(N)-period beginning in 2013, the Pakistani rupee lost 26 percent of its value against the dollar. Over the 5-year PPP-period beginning in 2008, the Pakistani rupee lost 20 percent of its value against the dollar. What that means is that we are supplying too many rupees and consequently the forces of demand and supply have pushed the rupee down. The higher the supply the lower the price and vice versa. The supply of rupees far exceeds the demand-and the resultant fall of the rupee. Look what we did in July-August: exports $4.6 billion (demand for rupees) and imports $12.1 billion (supply of rupees). Our exports roughly equate to the demand for rupees in the global marketplace-and our imports roughly equate to the supply of rupees in the global marketplace.

Dollar to rupee prediction