Will Rupee Devalue Further? Economic roller coaster

[HellsGuardian]

If gold is expected to drop further, why would it be wise to invest in it?
Btw in march 2020, the gold was quite low but due to lockdown there was very little trading, at least big gold sellers like ary were closed.
I am also skeptical why gold would drop further as it is considered safe haven in such scenarios.

[mgalaxy3]

state bank just bought dollars from market to increase dollar rate lOlll

[PKTUN]

in local desi community here we have few retired bureaucrats visiting and staying with their families. they are of opinion that the rupee gain / stability is artificial. Either the State Bank autonomy comes into effect or not a high surge will push exchange rate to 175+ before the next budget and to 190+ before 3rd qtr of 2021. Already over the news channels and online Pakistani news papers it is said repeatedly that power prices will spike 10 to 15% per kwH consumption. Taxes will be adval as per consumer actual usage.

back home for 3 senior citizens utility bills have already gone up by 27% within 12 months. by utilities i mean only SNGPL LESCO & WASA bills. domestic existence expenses are other case.

[HellsGuardian]

rupee gain is actually because dollar has depreciated globally. Secondly a lot of young people left Pakistan in last 1-2 years so remittances have increased, then previously imports were very low too so all this caused PKR to appreciate.

[Xulfiqar]

All this is against Pakistani fundamentals though.

[VCheng]

All this is against Pakistani fundamentals though.

The fundamentals continue to suggest a steady 10 per cent decline in value per year averaged over the long term.

[HellsGuardian]

PKR is consistently appreciating, do you guys this is long term trend?

[mgalaxy3]

Since 1947, pkr has only come down.

What makes you think 2021 will be better than 1947 or 1956 etc and go up in long term?

We're a poor economy..

[automakerz]

Pakistan Autos: Change is most definitely in the air

• Local and foreign automakers have lined-up to avail benefits offered by ADP-II before it’s expiry in Jun’21, having already attracted foreign investment of over $1bn till date. Simultaneously, all eyes are set on the next ADP that is expected to incentivize localization.
• The core affluence market for premium sedans faces competition from Hyundai Elantra and expected KIA Cerato as well as from compact SUVs including KIA Sportage, Hyundai Tuscon, DFSK Glory 580 Pro, Proton X70, MG ZS and MG HS (currently only CBU).
• The small segment, previously dominated by PSMC, has also witnessed competitive pressures, with variants offering wider options such as United Bravo, United Alpha, Prince Pearl and KIA Picanto.
• Despite growing competition, an ever strong dealer network entrenched across the country as well as commanding presence especially in the rural market makes for a continued case for INDU where recent PkR appreciation and possible introduction of new Corolla by FY23 makes for further upsides.
• Given average monthly volumes of PSMC rising by ~2,000 units in last 2 months and expected launch of new Swift, a short term upside in the stock cannot be ruled out.

[khurem]

10 percent decline every year? Maybe you don't realize what 10% depreciation over a longer period actually translate into. That would mean in 10 years (or by 2031) Rupee USD would be near 400 and in 20 years crossing above Rs 1000 to 1. That's not going to happen given the fundamentals at present. Haven't happened ever in past either in Pakistan over a period exceeding 5 years as 10% average depreciation is huge.

Also do check IMF, world bank or credit rating agencies like Moodys projections for USD PKR parity over next 5 years. I've seen that data (as of Jan 2021) as it is needed for my work. Their estimates are often correct especially over the long term. They expected USD PKR to remain stable during 2021 and 2022, and estimated an annualized depreciation of under 5% on average over the next 5 years. Their projections are quite detailed after incorporating the current country fundamentals and global economic conditions (which though may change for the worse).

[VCheng]

As a guide, please look at how far the PKR has already fallen over the past 40 years before looking to the next 40.

[VCheng]

PKR is consistently appreciating, do you guys this is long term trend?

The present bump is only temporary and due to meeting the IMF conditionalities and not due an improvement in the underlying fundamentals. The PKR will soon resume its sinking ways.

[khurem]

Yes, I have data as well since 90s. There may have been higher depreciation rates in past (from 1967 to 77 and 1987 to 1997) however since then there has never been a 5 year period where depreciation rate has been greater than 10%. The data you shared reflects that.

[VCheng]

I can only commend you on your optimism!

[khurem]

It's not based on optimism, based on hard data. IMF and other global bodies don't prepare projections based on optimism.

[VCheng]

Could you please post up the data that you refer to, so we can all see it. Thanks!

[khurem]

Ok just calculated the depreciation rate in past as well... in 67-77 and 87-97 too the depreciation rates were under 10% - 8% and 9% respectively.

[khurem]

I wish I could, however the company I work in has obtained subscription from World bank and Moodys for the services so it's kind of confidential. IMF projections are available though on their website I guess, will check.

[VCheng]

Ah yes, confidential.

But we are supposed to believe you without any supporting data. Of course. Yes, 9% is so much better than 10%.

All the while, a country of 230 million (and rising rapidly) exports only half of what it imports. Its currency will always reflect that fact as long as it holds true.

[khurem]

Well at least there is a source I'm quoting. What's your backup data for your claim of "10% average annual depreciation rate over long term"? At least I have a valid reason to question this claim of yours as this has never happened in Pakistan's history. The data you pasted showed exactly that.

As of March 31, 2021, the average depreciation rate over last 5 years was 7.8% and over last 10 years was 5.9%. That's a fact which you can easily calculate. So what's the basis of sudden jump into 10% depreciation every year?