1 US Dollar ~ 80 Pakistani Rupees

Posted on October 7, 2008
Filed Under >Owais Mughal, Economy & Development
Total Views: 51925


Owais Mughal

Do you remember an old adage:

‘ye cheez to Takkay ki nahiN hai’ (This thing is not worth a Takka).

Well, today the tables have turned. What was once true of BD Takka is now true for a Pakistani Rupee. As of today 1 Bangladeshi Takka equals 1.14 Pakistani Rupees . The phenomenal slide of Pakistani Rupee, which started around January 2008 continues unabated. Pakistani rupee is now trading at very close to 80 Rupees to a US dollar. Yahoo Finance was quoting Pakistani rupee at Rs 78.375 to a US dollar on October 6, 2008.

Pakistan Rupee v U.S. Dollar

We also had a post on this topic back in May 25, 2008 when Rupee had slid down to Rs 68 for a dollar but this time slide in Rupee’s value seems like the steepest in history of Pakistan. Rupee has lost almost one third of its value in the past 10 months.

The question that everyone is asking is whether current Government is capable of controlling this situation or is it beyond anybody’s control.
Pakistan Rupee v U.S. Dollar
Pakistan’s finance Minister (since May 12, 2008) is Mr. Naveed Qamar and atleast I’ve not heard anything from him about what are Government’s plans to bolster Rupee’s value or to stop fast depleting foreign exchange reserves of Pakistan (now down to approx $8.1 bn).

What is happening to a common person among all this turmoil is depicted well in a sher by Anwar Masood.

“jo dil pe guzarti hai raqam karte raheN ge”
kal tum ko bata deN ge raqam kitni bani hai


1. Yahoo Finance

77 Comments on “1 US Dollar ~ 80 Pakistani Rupees”

  1. Riaz Haq says:
    October 7th, 2008 10:06 pm

    Here’s a recent story from NY Times that might help understand the crisis of confidence pushes Pak rupee down:

    “When Mr. Dar asked Mr. Zardari how he thought the government would pay for the subsidy (to farmers for higher wheat price), Mr. Zardari replied,

  2. Riaz Haq says:
    October 7th, 2008 10:29 pm

    You plead, “Pakistan

  3. ASAD says:
    October 7th, 2008 10:38 pm

    I think Pakistan should immediately delink from the dollar. This is largely the dollar’s decline compounding the Ruppee’s decline. The Rupee should be floated against a basket of currencies with more weight on the Euro.

  4. Owais Mughal says:
    October 7th, 2008 10:51 pm

    Riaz Saheb, I have also read Zardari’s famous demand of $100 bn bailout. At first I thought of adding that statement to my post above but then I thought Zardari being Zardari must’ve asked for this number without any detailed homework and I didn’t think the statement will be taken seriously enough by any donor country/agency to actually loan Pakistan such amount of money.

    Rupee’s slide is probably related to flight of capital outside Pak, hence depleted reserves and all of it is probably because of lack of confidence in current Govt.

    May be I am taking too simplistic view of complex working of national economy, and I am not an economist either, therefore we would love to hear from our knowledgable readers on what they think are the reasons behind 1 US $ = Rs 80 today.

  5. Faraz says:
    October 7th, 2008 10:52 pm

    Asad, how does that work? If the dollar is going down shouldn’t the value of rupee against the dollar be going up?

  6. Aqil Sajjad says:
    October 7th, 2008 11:35 pm

    The exchange rate is determined by the supply and demand of the currencies. So if the country runs a huge trade deficit (imports – exports), then its currency is bound to fall. Unless it has some other source of foreign exchange that is. In the post-911 situation, Pakistan has lately been receiving $5-6b of anual remitances from abroad. This means that we can run a trade deficit of $5-6 b without getting into trouble. If we are receiving some foreign aid (not loans), that gives us an extra cushion. But if our trade deficit swells even beyond that, then we are bound to take a hit.

    Pakistan’s trade deficit has been rising for quite some time now. In 2005-6, we had a current account deficit of $4.490 billion (the current account deficit is obtained after including foreign remitances). In 2006-7, this rose to $7.016 billion. The only reason why the rupee did not fall then was that we received foreign investment of about $7b or so that year, which covered our current account deficit. This was not a good thing since it meant covering current consumption with foreign investment.

    In 2007-8, the trade deficit soared to around $20b and even after including the foreign remitances the current account deficit came to a wapping figure of about $14b. This much we could not cover even with foreign investment, which (as mentioned earlier) is an unhealthy and unsustainable thing to do anyway.

    In short, it should not be surprising that the rupee has taken a sudden hit.

    We should have started worrying about this problem at least as far back as 2005-6 but Shortcut Aziz and co used to boast that our economy is on a sustainable track even in 2007. The business community used to express the same kind of optimism. People who supported Mush and Shortcut wouldn’t and still don’t want to hear any criticism of their economic mismanagement or at least refute it with proper reasoning.

    And about the PPP and PML-N, the less said the better. All they did over the years was to run a single track campaign for ousting Mush and getting their exiled leaders back, and did no homework on how they would address the problems of the country once they returned to power. Now, the government is relying on a foreign bail out package, which would naturally come with strings and again, the amount we get is unlikely to be used wisely.

    Over the years, we did not push for manifesto oriented and issue based politics and discourse. If one loved Mush, everything his govt did was good; if one disliked him, everything he did was bad; if one wanted democracy, one ignored the flaws of BB and NS; if one was a jiala, all one did was to raise empty slogans about the ‘sacrifices’ of the party and the Bhutto slogan and likewise for the supporters of other parties.

    Now we are going to pay a price for it.

  7. Owais Mughal says:
    October 8th, 2008 12:02 am

    Shaukat Tareen gets top finance position. Following news appears in Dawn of Oct 8, 2008

    ISLAMABAD, Oct 7: The government has decided to appoint senior banker Shaukat Tareen as the prime minister

  8. Sajid Khan says:
    October 8th, 2008 2:18 am

    First ‘Aziz’ and now ‘Tareen’. When our govt. will understand that a good banker is not necessarily a good economist.

    And why not Mr. Nasir Hussain, the current husband of Ms. Sherry Rehman. He is also president of some bank / financial institution??

  9. Usman says:
    October 8th, 2008 5:55 am

    I am laughing at all those champions of democracy and their supporters who wanted Musharaf and PML out. For eight years dollar was at Rs60-Rs62, we did not have any issue of wheat, nor electricity. The previous government somehow managed it despite western boycott when musharaf took power, pakistan india confrontation, the earthquak disaster and the 2003 markets crash.
    The lawyer movement is another joke, the lawyers and judiciary has been used like a prostitute by the power hungry politicians. Why arent people protesting now? Look what our president said yesterday, ‘The freedom fighters in kashmir are terrorists’. We should all be ashamed of having Mr.10% who is declared mentaly unstable by his own doctors from new york as president.

    Pakistan will soon be a failed state, dollar will bounce to 600Rs, people will be looting each other and it will be worse then afganistan & sudan. India and israel will use the opportunity to attack on our nuclear facilities.

    Pakistaniat.com is so bias why arent you criticising the current government!!!

  10. Naseer says:
    October 8th, 2008 6:43 am

    - Owais Mughal Sahib,
    Not being an economist either but a concerned Pakistani like you, Adil and others in this forum.
    Just the feeling of being a little ‘whiter’ than our brother Bangladeshis led us to our break up. The Taka has been quite strong past many years.
    Aqil and Sajjad Sahib have very aptly put the situation in its proper perspective and we must not forget what pakistaniat.com is all about.
    We should respond/react as Pakistanis and Pakistanis only.
    No need to panic, as Aali Ji once said—
    — utho ahle watan , hub’bay watan ki aazmaish hai,
    –diloan ki, tan, man dhan ki aazmaish hai–


  11. jk says:
    October 8th, 2008 9:41 am

    Amazing. I remember clearly when it was 25 rupees to $1 dollar and we thought that was bad.

  12. jk says:
    October 8th, 2008 9:44 am

    ye cheez to Rupee ki nahiN hai

  13. Waqas says:
    October 8th, 2008 9:50 am

    This is all due to great policies of our beloved Musharaf

  14. jk says:
    October 8th, 2008 10:02 am

    Waqas > Our problems have existed since long before Musharraf.

  15. Omer Khan says:
    October 8th, 2008 10:13 am

    I just read that SBP has injected $ 100 mn into the market. Will this slide the price of dollar down? What do you guys think, will ever Dollar be cheaper than it’s current market value?

  16. Aamir Ali says:
    October 8th, 2008 10:39 am

    Superb achievement of civilian govt. Now they will go begging back to IMF and World Bank.

  17. Umar Akbar says:
    October 8th, 2008 10:45 am

    “Fool me once, shame on you. Fool me twice, shame on me.”

    Twice in recent memory, the PPP government has been proven itself to be corrupt, incompetent, and deceitful. Yet it was voted into power again, with the hapless Pakistani public celebrating in tow.

    Why is it that we never learn from history?

  18. Owais Mughal says:
    October 8th, 2008 10:48 am

    Naseer, your comment on comparison with Bangladesh is taken in positive spirit and it should be considered as an opportunity to do better on our economic policy maker’s part. I never intended bad for BD or their currency. May they grow more prosperous and stronger.

    You quoted Aali’s sher in the correct spirit. I agree.

  19. Amina says:
    October 8th, 2008 11:25 am

    Shows this sites bias against elected gobt. Why did you never write about this when this happened in Musharraf days which is when it started.

  20. Omer Khan says:
    October 8th, 2008 11:40 am

    If Pakistan doesn’t get the $100 bn bailout, Zardari is asking for, I wonder what our govt. has planned as a backup!!!

  21. Owais Mughal says:
    October 8th, 2008 11:48 am

    Ms Amina

    “hum pe tou ilzaam waisay bhi tha, aisay bhi sahi”

    We are not biased against anybody as a policy.

    Personal biases may show up once in a while as our writers are humans and they have likes and dislikes.

    You are free to make your own judgement.

  22. MQ says:
    October 8th, 2008 12:04 pm

    Most comments here are partisan and lack an understanding of the economy. Aqil Sajjad has given a fairly good explanation. It is basically a question of supply-and-demand.

    Just to put things in perspective, in 1982, when the Rupee was allowed to float freely, it was roughly Rs 10 to 1 US dollar; in 1998, it was 40 to a dollar; by January 2008, it had eroded to 60 to a dollar in spite of the massive inflow of the foreign aid and remittances. Given the current local and global situation, I won’t be surprised if it falls even further in the coming months. By the way, where is Shortcut these days?

  23. October 8th, 2008 12:34 pm

    There is an old Arabic saying: When you’ve got nothing, you still have laughter.

    Things are looking bleak in Pakistan, but we should remain hopeful. We must ask ourselves: as individuals, is there something we can do to alleviate our country’s financial and political quagmire? Perhaps speak with our congressman? Send more remittances back home? Or may be take a dance class?

  24. October 8th, 2008 12:56 pm

    Well said – Aqil Sajjad.
    I always wonder why in Pakistan do politics revolve around a person and not around a party (like in USA for example0 . Mind you it is not the best option either, but i would take that option any day, rather then seeing the same old nasty disgraceful faces for 20 years at a time.

    btw, I am almost 98% close to giving-up hope in Pakistan.

  25. Waqas says:
    October 8th, 2008 2:44 pm

    Aamer Javed hold on to that 2% and just pray to Allah InshaAllah things will get better.

  26. October 8th, 2008 3:36 pm

    Waqas – I have been holding to the last bit of hope for a looong time. The events of the last 2 years or so have been terrible. There is NO reason whatsoever for things to be this bad, and still deteriorate.

  27. Banker says:
    October 8th, 2008 5:05 pm

    Lets first put the blame where its deserved. Why is it that if the economy was so sound for last 7 years, it has crumbled in less than 7 months. Its because the growth of last 7 years was a facade.

    Pick up any report and it shows that the only growth was in service sector based on increasing consumerism. By reducing interest rates, the financial sector made huge profits. First they reduced rate of deposits which resulted in decreased savings rate. Secondly, credit culture was increased with the whole country borrowing crazily on multiple credit cards. Had the consumption been to buy locally manufactured goods, it would have increased the manufacturing base of the economy. Most of it was used to purchase imported bikes, split ACs, LCD TVs, locally ASSEMBLED cars wherein huge amount of foreign exchange reserves were used to import such luxurious items without any regard for the fact that cars run on fuel which is imported and all the electronic items run on electricity which we are going to run out of in mid 2008. Not a single megawatt was added to the national grid by previous government despite the fact it is known since 2001 that at current growth rates, we will run out of electricity by 2008.

    Would all these admirers of previous regime care to enlighten me how much of the FDI went into increasing our export base. Zilch. It came for buying profitable entities that were privatized where they have already taken out more in profits in last of 4 years than they have put in. It came in to casino (stock market) and alternative assets (real estate) which has increased so much that its beyond even in dreams of average pakistani to own a house.

    So much for the policies of previous regimes…..

  28. Banker says:
    October 8th, 2008 5:19 pm

    Now, only blame we can have with the present regime is that they have taken too long to realize the severity of crisis. If the western democratic governments are receiving flak for delayed decision making, we should cut some slack to our democratically elected government.

    Most important question is: What is to be done? Nobody is going to give us $100 Billion at the drop of a hat. They might give us $50 Billion over a period of 5 years i.e., $10 billion every year. But they need to see a program of how the present government intends to step out of the current mess even if they give us $50 billion.

    First thing we need to do is to use local economists and we do have some really good ones Kaiser Bengali, Shahid Siddiqui, etc and use the Planning Commission (thats why its there) to chalk out a plan to stabilize the country say with the first $10 billion. We need to put focus on agriculture and expand our export base. It wont happen overnight but a plan has to be put in place to make use of the funds and how they will be repaid.

    And please get rid of Shaukat Tarin. Being a banker and having been involved in KSE, Citibank, Habib Bank, Union Bank and Saudi Pak Bank and having made billions; like his predecessor he can only put in place short term money making policies. Because that how the bankers are trained. Next quarter end, bonus targets etc. We need people who think like economists, in terms of sustainable development etc. I can assure you, Shaukat Tarin or anyother banker who has spent his life in commercial, investment or coporate banks are incapable of doing that.

    And if nothing works, we can always abduct some pakistanis, have them raped in Afghanistan bagram base and sell them to US for a few hundred thousand dollars each. It has sustained our economy so far.

  29. Riaz Haq says:
    October 8th, 2008 6:30 pm

    You say “Why is it that if the economy was so sound for last 7 years, it has crumbled in less than 7 months. Its because the growth of last 7 years was a facade.”

    If it was a facade, how did Pakistan’s tax revenue and GDP double in 2000-2007? You know, it takes a lot more effort and time to build than to destroy, particularly when it comes to building confidence of consumers, investors, businesses etc. You can not create millions of jobs and move 10-15m people from poor to middle class if you are not trusted. The world of business and investment had faith in Shaukat Aziz and Pervez Musharraf. That faith disappeared with the appearance of Zardari and Co, and Pakistan returned to the bad old days of the 1990s when PPP and PML(N) made a mess of Pakistan’s economy. Antiquated, central planning types like Kaiser Bengali can not help restore confidence. They are relics of the past, unfamiliar with how to navigate a modern national economy out of troubled waters.

    I invite you to read with an open mind and understand Aziz’s and Musharaf’s economic legacy and Zardari’s economic policy at:


    and http://www.riazhaq.com/2008/09/will-economic-mess-get-worse-under.html

  30. Hyder says:
    October 8th, 2008 6:32 pm

    One of the guys on this forum has asked what an individual can do to help the country in this crisis. I think this is the most important point someone has raised. It is useless to make suggestions that who should be the finance minister and who should not be. Let

  31. Eidee Man says:
    October 8th, 2008 9:50 pm

    I’m very surprised none of the commenters mentioned oil. The situation is really not that complex; the value of the rupee is tied in part to our foreign exchange reserves. Pakistan has one major inlet of foreign exchange: expatriate workers in Gulf countries, and one major outlet: oil!

    A national budget that spends majority of its foreign exchange reserves on subsidizing oil can simply not sustain the doubling of crude prices, no matter how well planned and strong it is. As much of an adverse impact it will probably have on ordinary people and businesses, the government simply cannot afford to subsidize oil.

    Add to that the instability caused by the thawing of an 8-year freeze on the political system, and weekly terrorist attacks, and you may begin to wonder why the economy is holding up as well as it is!

    The world is going through a big financial crisis, and certainly Pakistan is going through a bigger one. But this crisis also gives an opportunity to do things right this time. I think what the government needs to do at this time is to first get the debt situation under control, and then make massive investments in infrastructure, thereby giving employment to millions of people…this may not be the best thing for the stock market and other indicators, but in the end it is the best strategy for building a strong foundation for the future.

  32. Omer Khan says:
    October 9th, 2008 12:21 am

    Comments here have been explaining the reasoning behind the Pakistani economic crisis and indeed are informative.
    I would really appreciate if someone can shine the light upon what is the future of Ruppee vs. Dollar ! and our economy.

  33. Riaz Haq says:
    October 9th, 2008 12:37 am

    Eidee Man,

    You say, “Pakistan has one major inlet of foreign exchange: expatriate workers in Gulf countries, and one major outlet: oil!”

    I think your statement ignores two other major sources that have significantly declined: Exports and Foreign Investment. Have you thought about why these two declined so dramatically?

    You also say, “I think what the government needs to do at this time is to first get the debt situation under control, and then make massive investments in infrastructure, thereby giving employment to millions of people

  34. banker says:
    October 9th, 2008 2:34 am

    @Riaz Haq,

    I was amazed at your oversimplified analysis and twisted economic logic on your website. Reading through it seemed more like reading a communist era propaganda about the achievements of the government. Though I should admire that you at least have the honesty to admit mistakes of energy sector. Just this one example is enough to show that how far the government of Shaukat Aziz was from ground realities.

    Now to some serious analysis. Stock markets world over are there over secondary trading but the primary purpose is to provide financing for new projects through IPOs, right issues etc. Can you recall a single greenfield project IPO or right issue for financing an expansion in the last 7 years (ignoring the privatization which did nothing but add to government coffers). None.

    The talk about all the FDI we received. Did it go for establishing any new plant that increased our export base or manufacturing base. Answer: None. All the FDI went into stock market (secondary and portfolio investment – hope you the difference between primary and secondary market) and real estate taking the prices through the roof and way beyond the reach of a working class salaried person.

    The tax to GDP ratio has remained stable during the whole period which means that taxation base has not increased. The only industries that have grown have paid taxes. In our case (and you dont have to take my word for it – read SBP or even your much admired Citibank research reports) the growth has been in services sector mainly banks. So the profitability of the banks has increased manifold which has resulted in higher taxation.

    But was the increasing profitability good for economy. When inflation is 13% and banks give depositors a return of 3%, and charge consumer loans of 24%, the only one benefitting in this scheme is the banks. Savings rate has gone down hill. The nation as whole has become hugely indebted by taking on car loans, house loans, credit card loans etc.

    I know you will not agree with me. But read the Citibank (which u seem to admire a lot) latest research report of September 08. If you can’t find it, email me, I will email it to you. It clearly mentions that seed for the current crisis were sown in Shortcut Aziz’s regime. Its only now that we are eating the fruit.

  35. Narendra says:
    October 9th, 2008 4:09 am

    Rs 78 to a dollar for a couple of months should not be worring.
    In the last six months the indian rupee has also lost by 7 to 8 rupees.
    On your president Zardari- We are happy with his outlook. It
    is refresingly different. Why do you put him down as Mr10%.

    We want pakistan to prosper and be financially sound. In India
    the small scale industry ie investment upto 10crores has given
    huge employment oppurtunity.This helps in increasing the manufacturing base. These industries have graduated to medium scale industries in a span of 15 years. large scale
    indusries procure components from these small scale industries
    and export it to western markets.

  36. zia says:
    October 9th, 2008 5:20 am




  37. banker says:
    October 9th, 2008 9:03 am

    The so called educated pro-musharraf crowd has returned to the site (hint: they use a lot of capital letters in their posts) .

    I hate it when people use posts to divert traffic to their blogs but rather than use this site to write a long post and crowd out others, I have written a post on my blog. Instead of explaining economics as I understand it, I have just used data and other reports to drive home the point that seeds of current crisis were sown in earlier regime.

    Pssst: The data is actually from Citibank (Shaukat Aziz’s employer) and State Bank of Pakistan :)


  38. Uzma says:
    October 9th, 2008 10:48 am

    And people keep withdrawing their foreign exchange from Pakistan..!!

  39. mr_banker says:
    October 9th, 2008 10:54 am

    as they say, little knowledge can be be a dangerous thing. they also say proof of pudding is in the eating and fool me once shame on you, fool me twice shame on me.

    below is a graph of of pakistani rupee (pkr) since the start of 1990. in the decade of democracy leading up to musharraf’s rule, pkr/usd($) went from around 21 to 52 which translates into an annualised depreciation of 9.5% per annum. in comparison, under shaukat aziz/musharraf regime pkr went from 52 to about around 61 which amounts an annualised depreciation of about 2%. note that in the 1990s, pakistan’s external debt went from around $20bn to around $45bn including the frozen fcy reserves. in contrast under mush/s.a. external debt went from $35bn to around $41bn while reserves increased from $0.5 to $15bn at peak before the spike in oil prices.


    also the claim that exports did not increase under mush/s.a. regime is nonsensical as well. when musharraf came to power in 1999, pakistan’s exports amounted to around $8bn. in the next 9 years, pakistan’s export more than doubled to $17bn. essentially in 9 years of musharraf’s rule, pakistan exports increased by more than the increase in pakistan’s total exports for the prior 52 years.

    going back to issue of pkr stability under musharraf’s rule, that was primarily due to reserve build up initially due to increase in exports and privatisation and later due to increase in foreign direct investment in sectors like banking and telecom. in comaprison, since the current govt has come to power, not only has fdi stopped, but also pakistani investors are sending their money abroad which is a perfectly rational course of action given the competence level of politicians as well as their track record.

    as far as the future of pakistani economy, i see pain for a long time. my advice to people is to still convert their savings in $ and ship money abroad. in the short run, country will likely be bailed out by imf. that however will only delay the inevitable.

    pakistanis voted for these clowns so they should be prepared to live with the consequences.

  40. Riaz Haq says:
    October 9th, 2008 11:04 am

    It seems to me that you have not read my post with an open mind. Instead of responding to it and the points I raised, you seem to be simply determined to prove yourself right by mischaracterizing and dismissing what I have written by calling it “communist propaganda”.

    It also appears that your agenda is to distract the readers from the current economic mess by blaming it on “Shortcut” Aziz and by claiming nothing good happened under him , just the labels you use are sufficient for a reader to see your bias.

    If you like what you see now, then there is nothing any one can do to change your mind. I guess you and Kaiser Bengali would rather have “Mr. Ten Percent” and “Multani Joker” managing your economy that Musharraf or “Shortcut” Aziz.

    There is none so blind as those who will not see.

  41. Umar Akbar says:
    October 9th, 2008 11:27 am

    Dog bites man is not news- man bites dog, is. In the same way, collapsing economy under Mr 10 percent and his loyalists, is not news.

    What does the Pakistani nation expect from the PPP government with their shameless backtrackings, their 24/7 state-sponsored propaganda and all-around-clueless behaviour?

    ‘Jab maseeha dushman e jaan ho, to ho kioonkar ilaaj,
    Kone rehbar ho mera jab Khizr behkanay lagay’

    PS Apologies: These metaphors have been very, very loosely applied to the current situation. Asif Ali Zardari-Bhutto and his mates are not Messiahs or leaders, not by a long shot, but by design or by default, they are at the helm of this rudderless ship.

  42. Riaz Haq says:
    October 9th, 2008 11:35 am

    For those of you seriously interested in the facts, here’s an excerpt from a report from Business Recorder of Oct, 2007 titled: “KSE shows 38 percent growth in fiscal year 2007: report”

    Here it is:

    “The market capitalisation also grew at a remarkable rate of 43 percent, reaching its peak at over Rs 4 trillion ($66 billion). However, despite the healthy run-up witnessed on the bourse, the ready market turnover during FY07 averaged 221 million shares, which was the lowest since FY02, as a result of which the average daily value also shrank to a three-year low of Rs 22 billion.

    The KSE saw a total of 16 new listings and 12 companies offering equity, which set out to raise Rs 6.3 billion, including premium in FY07. It included OGDC’s second issue, which accounted for 38 percent of the total size.

    This was against the earlier year’s total 14 new listings, including 12 public offerings to the tune of Rs 6.5 billion. The subdued interest was observed by the private sector, due mainly to lack of tax incentives for listed companies and the stringent requirements of corporate governance.

    At the end of the financial year, 658 companies remained listed on the Exchange. Like equity markets, corporate debt market also witnessed three new listings of Term Finance Certificates (TFCs) valued at Rs 6 billion.

  43. Anti-Pak-Bashing says:
    October 9th, 2008 11:41 am

    @ One can see Pak-bashing made
    you guys completely blind, do’nt you
    know what is going on out there since 7/10 ?
    Bankruptcies, insolvencies, nationalizations,
    interest rates, unemployement disaster, Govt.
    interventions, Europeen Bank’s resuce fund of
    360 Billions of Euro, IMF’s Strauss-Kahn announces
    urgent sum of 1.400 billions of US$ required for
    rescue. Does Pak Rupee exist in Mirz’s Janat ??
    Its really pendoo !

  44. Owais Mughal says:
    October 9th, 2008 12:38 pm

    Well, a small good news. Pak foreign exchange reserves have increased slightly (by $180 million) to reach a total of $8.32 billion mark. This is first increase since June 2008.

  45. Rafay kashmiri says:
    October 9th, 2008 2:36 pm

    @ Umar Akbar,

    how right you are Sir, and the shair was so appropriate!

    Rafay Kashmiri

  46. Banker says:
    October 9th, 2008 8:02 pm

    Another legacy of Musharraf era is Shamshad Akhtar who does not have an idea what she is doing. The rumor mill has it that her days are also numbered because she is incapable of managing the situation


  47. Aamir Ali says:
    October 9th, 2008 8:55 pm

    Will cussing at Musharraf and Shaukat Aziz lead to the PKR increasing in value ? No. The only reason for engaging in it is that the current govt has offered no alternative. No monetary or fiscal policy and no economic vision. Not surprisingly considering clowns and crooks like Zardari are in charge.

    Pakistanis should reap what they have sown.

  48. Omer Khan says:
    October 9th, 2008 9:51 pm

    The way I see it, there seems to be hardly any hardcore solution to our economic crisis.

  49. Banker says:
    October 10th, 2008 4:17 am

    Funny thing is it is Musharraf and Musharraf alone who with his NRO gave Zardari a clean slate and is responsible for withdrawing all the cases lodged against him with taxpayers money.

    Who gave Musharraf the right to forgive Zardari and waive off all the money he has looted from the country. Was it Musharraf’s money that Zardari looted? How we simply seem to overlook this fact and put all the blame on Pakistani nation?

    First things first. The immediate solution is to get around $10 billion for the this fiscal year as aid. We might get it since Shaukat Tarin is on board. But being a banker, I hope he does not screw up the future economy as Shaukat Aziz ended up doing with his policies.

  50. Naseer says:
    October 10th, 2008 5:38 am

    Dear All,
    I am regularly reading this $Rs blog which has now grown into
    a ”us versus them ” forum.
    Will Mr Shaukat Aziz please stand up and be counted as the last Prime
    Minister and respond. He is under no binding agreement.
    However he is under obligation to the hapless people of Attock and Thar from where he was made to file his bye election papers.
    He should say that ” banda e mazdoor ke auqat ” in Attock and Thar have not changed for the worse(they were exactly the same before he took over and left it exactly the same).
    Let this blog be a blog and not a cut/paste shop.
    A note: The in- camera session.
    ” jaan kek kar jo bulaya to bura maangaye,
    aina unko dikhaya to bura maangaye.

    And I would again say to be patient, after all, they are ”our” elected reps.
    Not all of us should start mudslinging again, today.
    Wait a bit, just a bit, a little bit, please —–

  51. mr_banker says:
    October 10th, 2008 5:50 am

    basic math skills are a useful tool for economic analysis.

    under shaukat aziz/musharraf’s tenure, pakistan’s reserves went from $0.5bn to $16bn, mkt cap of stock market went from $5bn to around $70bn, govt budget expenditure went from $10bn to

  52. banker says:
    October 10th, 2008 8:14 am

    Free elections does not mean that you withdraw cases against criminals and corrupts, those who have looted the country.

    Free elections go hand in hand with free judiciary. But I believe that was too much for Musharraf-Shaukat to digest specially since the chief justice stopped the sale of Pakistan Steel at pittance.

  53. Aamir Ali says:
    October 10th, 2008 10:24 am

    Musharraf made the mistake of NRO, but Pakistanis made the mistake of voting NRO-holders into office. However since the February 18 election already happened, and Musharraf resigned, it is pointless to talk about it.

    It is interesting however that Pakistanis are still obsessed with Musharraf, despite a new govt being in power for eight months which has brought no fresh policies.

  54. zia says:
    October 10th, 2008 11:40 am


  55. Omer Khan says:
    October 10th, 2008 7:25 pm

    Mr. Banker,

    Are you certain that U.S $ will go above 100 in the next few months.Will it ever come below 80 again?

  56. Aqil Sajjad says:
    October 10th, 2008 9:01 pm

    This has been turned into a Mush supporters vs those who criticise his policies thread and the discussion is now centered more around cutting and pasting numbers that support one’s case.

    This is where one starts to wonder if we are over politicised since we often fail to take positions on various issues independent of which party or leader we support.

    Has the gdp increase substantially during the Mush period? Sure it has. Has Pakistan received substantial financial relief from other countries after 911? Again, the answer is a big yes.

    Is it reasonable to quote in isolation the growth in gdp while ignoring the fact that he was operating in a very different and far more favourable situation than the govts in the 1990s? Certainly not. Every govt should be judged while keeping in mind the situation it has to work with instead of just quoting numbers out of context.

    Musharraf’s performance should therefore be evaluated by considering the extra amount of foreign inflows after 911 along with the growth in the gdp. After such an analysis, if one can say that his govt made good use of the extra money to put Pakistan on a sustainable path for development, then he indeed deserves praise. On the other hand, if a careful analysis shows that the growth was mainly consumption driven and sustainability was largely ignored, then one should conclude that he and Shaukat Aziz lost a golden opportunity.

    The way some of Musharraf’s supporters continue to quote numbers about how the gdp has grown while completely ignoring the context and addressing whether enough was done to make the growth sustainable is as ridiculous as those Mush bashers who quote the number of suicide bombings in Pakistan under him and comparing with the earlier periods in order to unfairly put the whole blame for this problem on him.

  57. mr_banker says:
    October 11th, 2008 4:14 am

    actually economic conditions in the 1990s were much more favourable for pakistan than those prevailing under much of musharraf’s rule. in the 1990s, pakistan obtained more concessional funding than under musharraf’s rule. during the 1990s pakistan’s external debt went from $18bn to around $36bn. most of the debt was obtained from multilateral agencies on favourable terms. yet despite $18bn increase in debt and another $8-$10bn stolen from foreign currency depositors, pakistan was left with $500mn reserves and country had defaulted on commercial debt by the time nawaz sharif was kicked out from power in 1999.

    in comparison, under musharraf’s rule pakistan’s debt increased from around $36 to $40bn. musharraf did benefit from 9/11 but this benefit was in the form of debt rescheduling rather than direct aid which is the common perception in pakistan. restructuring of debt put pak economy on a neutral footing and gave breathing room to the govt to put the economic house in order which was in complete mess due to mismangement in the 1990s.

    as far as u.s. aid provided to musharraf, that amounted to around $11bn over a 6 year period or approximately $2bn per year which is a pittance when compared to the total foreign inflows in pak. for the financial year 2007 pakistan recieved $29bn of inflows in the shape of exports +remittances+fdi. anyone who can do basic math can see the significance of u.s. aid to pakistan’s economy.

    pakistan did face increasing trade deficit during the last two years of musharraf’s rule but that was completely due to rising oil prices – a factor beyond musharraf’s control. yet despite rising trade and current account deficit, pkr/usd managed to stay around the 61 level mark. there are couple of reasons for this: 1. importers had become used to currency stability and were not booking forward cover 2. investors continued to pour money in pak until earlier this year. now however fdi has stopped and local investors are shifting money abroad which is causing a slide in pkr.

    going forward, i continue to see weakening in pkr despite the massive fall in oil prices over the last few weeks which has greatly improved terms of trade for pakistan. pakistan will also be able to obtain imf funding which should provide some stability. however corruption, mismanagement and political instability will mean that any benefit of foreign loan will be wasted and we will have a situation akin to 1990s.

    my advice: if you trust zardari and co to do the right thing, keep your savings and investments in pak. if you dont, convert your money to $ and keep your money in dubai. this is exactly what most rich pakistanis have done.

  58. Zia Ahmed says:
    October 11th, 2008 6:55 am

    I don’t know where this discussion is going to now.. but the question is: Will pkr gain the state back which it has lost in last 3 months ?

  59. PatExpat says:
    October 11th, 2008 7:14 am


    Has the PKR ever regained the state it lost?

  60. Aqil Sajjad says:
    October 11th, 2008 10:22 pm

    Mr. Banker:
    Thank you for your response. However, I find it hard to agree with the claim that Pakistan was in a more favourable external environment in the 1990s. Here are some points.

    The foreign debt increased from $18b to $37b or so in 11 years under the political govts as you point out. So extra debt of about $19b. However, note:

    (1) This was not all concessional; in fact, by the mid-1990s, about half of the new debt was non-concessional.

    (2) A substantial portion of the external debt in the 1990s was short-term.

    (3) Most of the new external loans in the 1990s went into servicing previous loans and therefore, could not be injected into the economy. This can be scene from the fact that in the 1990s, the total amount repaid as interest and principal was somewhere around $30b compared to the $18b or so of increase in the external debt in this period. The political govts in the 1990s inherited the debt burden accumulated during the Zia period and the anual debt servicing cost was already about 40% of the budget in 1990.

    Now, Under Mush, The external debt has increased from around $37b to $45b or so. So $8b extra over an 8 and a half year period.
    Moreover, note:

    (1) In December 2001, Pakistan received a substantial rescheduling for about $12.5b of its debt. This immediately reduced Pakistan’s anual debt servicing expenditure by a billion or so. The political govts in the 1990s were working under sanctions, and did not receive such generosity which gave them such a sudden relief.

    (2) The $11b or so from the US, which you also mentioned. This was a ‘mufta’ which does not have to be paid back.

    (3) Foreign remitances, which averaged about $1.5b in the 1990s, sharply jumped after 911. From 2001 to 2007, the average amount of anual remitances was about $4b, thus Pakistan received an extra inflow of $15b through remitances alone in this 6 years after 911.

    So all in all, it is hard to deny that Mush was operating under a very favourable situation compared to the govts in the 1990s.

    Also, while you have addressed the external environment in your post, you have not talked about the saving rate, revenue/gdp, the current account deficits, and the portion of FDI going into new businesses as opposed to buying existing ones. These are important indicators of the sustainability of growth.

  61. Banker says:
    October 12th, 2008 4:11 am


    Very true. Whenever we have the military governments, a reason comes along that opens up doors to foreign aid. During Zia, it was Afghan war and during Musharraf’s tenure, it was 9/11. The amount of Foreign Exchange received during this time whether as aid or remittance was misspent on military expenditure. And when these dictators leave, its time to repay these loans.

    Despite all the corruption of BB and NS, we have to thank BB for her IPPs and NS for the resilient banking system. Otherwise we would have been in the stone age without the US bombing us.

  62. mr_banker says:
    October 12th, 2008 4:41 am

    aqil sajjad,

    i am sorry but you analysis does not make sense to me and nor do the numbers you give provide an accurate picture.

    1. during the 1990s, gop borrowed a total of about $27bn instead of $17bn that you claim. in addition to $17bn acquired from external sources, the govt also borrowed another $10bn from pakistani foreign currency depositors which the govt then ended up stealing when it froze foreign currency accounts. this $10bn in essence ended up being a foreign currency grant by the citizens of pakistan to gop and the amount is almost equal to funding provided by uncle sam after 9/11. please note that all pakistan had to show on the asset for the $27bn increase in external debt in 1990s was $500mn in reserves. btw of the $11bn or so provided by uncle sam post 9/11, $5bn was for military expenses for operations by army in tribal areas. this money was not aid as claimed by you.

    2. you claim that half the borrowing in the 1990s was from commercial sources which contradict your claim that external environment was less favourable in 1990s compared to this decade. for a country to borrow on commercial terms, it has to show lenders that the country is solvent and it has not defaulted on its previous debt. when musharraf came to power, pakistan had defaulted on its debt which meant that pakistan could not take commercial loans unlike in the 1990s. also u.s. was the only country applying sanctions on pakistan in the 1990s. u.s. however did not prevent pakistan from borrowing from multilaterel agencies. as you yourself point out, half the amount borrowed by pakistan was on concessional terms clearly indicating sanctions were not a restriction. please also note that in the 1990s, japan was the largest aid donor to pakistan while currently uk is pakistan’s biggest aid provider.

    3. the rate of external debt build up in 1990s unlike anything witnessed in the history of pak. pakistan’s fcy debt after 41 years of existence amounted to $18bn. in the next 11 years this amount increased by 150% including fcy deposits. debt burden faced by govt of shaukat aziz was far far greater than that faced by govts in the 1990′s. restructuring after 9/11 did help but the amount restructered was $12bn which meant that govt still had to service unstructred debt to the tune of $24bn – an amount which was far greater than that at the start of 1990.

    3. pakistan all through its history has run huge trade and current account deficit and will continue to do so for a long time to come. however pakistan external position by the end of fy2007 had been much stronger than it had been over the last two decades. note also that pakistan’s debt stood at $41bn at the end of fy07 and not $45 as you claim:


    External debt and liabilities (EDL) at the end of FY07 were $40.17 billion.

    ..The external debt and liabilities (EDL) declined from 51.0 percent of GDP in FY02 to 25.7 percent of the projected GDP for FY08 by end-September 2007. The EDLs were 297.2 percent of foreign exchange earnings at the end of FY00 but declined to 122.5 percent by end FY07. The EDLs were over 19 times of foreign exchange reserves in FY00 but declined to 2.5 times by end 2007…”

    btw almost all energy deficient developing countries currently run current account deficits including countries like india, tukey, vietnam, sri lanka etc. due to spike in oil and commdodity prices, all these countries have been dealing with rising current account deficits. in terms of magnitute, pak falls in the middle of these countries. like pakistan, all these countries have been financind their deficts through private capital flows. difference between pakistan and these other countries going forward will be that govts in those countries will be able to attract foreign capital unlike pakistan. and who could blame investors not putting money in pak?

    i certainly would not invest in a country headed by the likes of zardari and n.s. other pakistanis are welcome though. word of caution however: both zardari and ns keep most of their wealth abroad. and for good reason. who better themselves to know how corrupt and incompetent these leaders really are? investors like myself however always win. i made money investing under musharraf and now i am making money being short pakistani rupee and stocks. thank you voters of pak for giving me such a fool proof opportunity.

  63. Rafay Kashmiri says:
    October 12th, 2008 3:12 pm

    @Owais Mughal,

    one can see what kind of a bull-fight is going on
    62 posts to prove I don’t know what, I am just watching
    French TV2 prime-time News, among the titles
    concerning the World wide Bankruptcy due to the
    USA & EU, they succeded in inserting you know what ?
    guess? Salman Rushdie !!!!!! to divert our attention !

    Arz kia hae (Azaad)

    Wahan ku’tt rahi hein gardan’ein,
    aur ran hey Ghams’aan ka,
    Banker-o-Nabankeron ki,
    Mualmela sood dar sood ka,
    qarzon ka, aur dealon ka
    Jaib-katray jab, ch’ala’en bankon ko,
    Loote’nge woh, auron key noton say, mazah
    Nehein ma’aloom, Hamein loota kisney ?
    Han ! zikr hota hay to sirf,
    Kambakhet, Salman Rushdie ka !!

    Rafay Kashmiri

  64. Aqil Sajjad says:
    October 12th, 2008 9:37 pm

    Mr. Banker:

    I think you misinterpreted some of my statements so let me clarify.

    1. I did not say that the govt borrowed an additional amount of $17b; what I said was that the debt increased from about $18b to $37b, so the net increase in the external debt was about $19b. However, in the same period, Pakistan also spent about $30b or so on servicing its foreign debt. This shows that most of the new debt in this period was used to service old debts and could therefore not be spent within Pakistan.

    2. You apparently interpreted my use of the words ‘non-concessional’ as commercial debt. That’s not what I said. What I meant was that the terms of the debt were not very easy. For example, you can check the piece by Aslam Sheikh


    3. I did not claim that the $11b provided by the US was all aid. Yes, some of it was indeed the expense for the military operations. However, if the money is spent inside Pakistan, it does become a part of the gdp and also has the usual spending multiplier effect too.
    (For those not familiar with the money multiplier and still interested in following this discussion (doubt there would be that many:)), here is an easy to understand explanation:
    http://en.wikipedia.org/wiki/Multiplier_(economics) )

    4. The forex accounts: the govt did give rupees in return for those dollars, though the exchange rate was less than the market rate by several rupees per dollar. So the entire amount was not a complete ‘mufta’ for the govt as was the case for the $11b provided by the US after 911.

    5. The external debt was $45b on March 31, 2008, which was when power shifted from the Mush led set up to the new one. Check

    this link

  65. mr_banker says:
    October 13th, 2008 6:07 pm

    aqil sajjad,

    you keep repeating the same point without addressing the obvious logical inconsistency in your analysis and without realizing that you are weakening your own arguments.

    you are saying that only solution govt had in the 1990′s to manage pakistan’s external debt was to borrow more debt. this policy is described as a debt trap and govts who lead their country into this predicament are viewed with scorn and contempt by people who have a rudimentary knowledge of economics and finance. please also note that since pakistan’s external debt had doubled during 1990s, debt service obligation at the start of musharraf’s rule was 2x that at the start of democratic rule. debt relief offered to pakistan post 9/11 only pushed back principal payment and did not result in waiving of interest charges. yet under musharraf’s rule pakistan’s external debt grew by half the amount of increase in debt during the 1990s while reserves reached over $15bn at peak compared to $0.5bn at the start. to put this another way, pakistan’s net debt as measured by fx debt minus reserves stood at $35bn at the start of musharraf’s rule compared to $37bn currently and around $20bn at the start of 1990. the improvement in pakistan’s debt profile was reflected in country’s credit rating under musharraf.

    your last post also contains some other misleading analysis as well. you talk about the multiplier effect of $2bn per annum in u.s. aid but in pakistan’s context, this amount is fairly insignificant when you consider that pakistan has an economy of $150bn, budget of $30bn, exports of $18bn, inward remittances of $6bn. moreover fdi over the last two years has exceeded that amount of u.s. aid granted over 6 year period.

    you also claim that freezing of fcy accounts was no big deal because depositors got paid in rupees. if pakistanis are so happy and eager to convert their dollars holding into rupees, can you please identify why politicians like zardari and n.s keep their wealth abroad? btw you also dont seem to be aware of the the fact that in financial analysis, their is a big difference in local currency debt versus fcy debt especially in the context of third world countries. since all governments have power to tax and since govts directly or indirectly print money, their local currency obligations are much less riskier than fcy debt because govts can tax or print money to pay lcy debt. fcy debt is a different story because as much as it would like, gop unfortunately cant print usd. if in theory lenders were willing to recieve pkr payment against dollar lending, pakistan would not be facing balance of payment problems and pkr/usd ould not have weakened from 61 at the start of the year to around 80 currently.

    the weakening of pkr over the last few months is in fact largely due to the freezing of fcy accounts in the 1990s as well as economic mismanagement over that period. local savers and investors want to maintain their purchasing power which wont be the case if assets are maintained in pkr. investors have identified the fact that govt has no policy to deal with economic challanges which is why people are converting their savings into usd and sending money abroad which is a perfectly rational course of action.

    anyway all this debate is moot. investors who believed in the economic story under musharraf benefitted hugely through thei investments in pak. almost all big investors and industrialists saw danger at the start of the year and shifted huge amount of their wealth abroad. smart investors like myself will continue to make money by being short pakistani financial assets. real losers will be the people of pakistan.

  66. Aqil Sajjad says:
    October 14th, 2008 3:33 pm

    well this thread had expired and looks like we are the only two weardos left here, so I think its time to close the discussion for now. We will probably get another opportunity to resume this soon.

  67. Owais Mughal says:
    October 15th, 2008 5:34 pm

    Rupee has hit a new low. Jang is reporting that Rupee was being traded at 1 US $ = Rs 80.80 today.

  68. Rehman says:
    October 16th, 2008 6:23 am

    More bad news;

    Bush secret order to send special forces into Pakistan


  69. Owais Mughal says:
    October 16th, 2008 10:50 am

    Rupee further drops to 1 US $ = Rs 81.80 today (Jang update 10/16/08)

  70. zia says:
    October 16th, 2008 10:26 pm


  71. November 3rd, 2008 3:02 am

    Yaro you people are stupid to think about these things…… if we can sove the problem of electricity in one dat we can do any thing don,t woory got it?????????

  72. shahid says:
    November 10th, 2008 12:07 am

    shaukat aziz and now shauket tareen,,,,,,,May Allah Bless Pakistan.

  73. Rawshan Iajdani says:
    November 19th, 2008 6:24 am

    Alaaaas!!!!! I never knew Pakistan was living on credit cards for all all those years and the economic and growth that were projected to the people of Pakistan and to the outside world was nothing but bubbles.. A country could never survive this way and move forward. I wonder h0w the GOP could ever pay those debt back.. by borrowing more and more money??? I saw they took 7.5 bn loans from IMF on 5 years term with 5% rate. Even a car loan cost less than that.

  74. October 7th, 2009 4:53 am

    Beside all the problems, exporters should make full advantage of low currency rate as we are getting cheaper labor here, while goods are being sold at same US dollar rate outside pakistan. through which the industrialists are making good profit.

  75. yousuf says:
    January 7th, 2010 6:31 pm

    US $ is almost close to Rs.85 and sill rising and it is predicted that it might reach RS.100 mark soon.

    Times were when US$ was 4.15 to a rupee in early ’50s`, and we had monopoly of Golden fibre of East Pakistan Jute and bumper crops of cotton to earn good foreign exchange.

    All things essential for life were very cheap and affordable, poors had easy life as they could manage on meager salaries.

    What did go wrong, or why Pakistani rupee slided to (still sliding) such low level despite of our robust external trade of $16 billions and more?

    Nincompoop Economists would feed their odd spiel of economic theory to justify the rot, ( like higher Petrol prices Etc), but the real reason which i could guess is the flight of capital to safer and greener pastures by the corrupt Politicians,Indutrialists, bureaucracy, Armed forces personals, and general public.

    They first of all are afraid that their illgotten gains will land them in troubles, secondly the lure and romance of owning a property in foreign countries, 3rdly stashing the illgotten wealth to educate their kids in foreign countries Etc, and also enjoying spree in European resorts and Casinos.

    It is the common man who suffers most because of inflatio as t a result of dishonest and cr8iminal activities of few corrupt persons.

    Somehing has to be done to stop this further rot and slide of the Greenback, and our only hope is Supreme court , which can solve this problem by scrutinising the corrupts and pronouncing sentences on them in order economic health of country can improve and we can pay back our foreign debts.

  76. Jeddy says:
    November 29th, 2010 4:05 am

    Businessmen and everyone else save their income in international banks in different currencies, not in Pakistani rupees – so there is really no way of telling how much money is earning from trade. Businessman however will never save foreign currency in Pakistan ever again.
    No one can open a new account in any Pakistani bank is a problem. The State Bank of Pakistan requires ‘Documented Proof of |Income’. A person suddenly inherits a large sum of money, how will he save that money if the private bank will not allow him to have an account prior to that?

  77. Lakshay dhiman says:
    July 20th, 2011 10:11 pm

    hi paki frnds,
    I m an indian or hamari currency value apki currency se kafi zyada strong h,
    1US $= 46 INDIAN RUPEES(&still getting stronger) it is because we r one of the strongst economy in asia after china.,
    So bhai jaan lage rho…
    Allah mafi deve tum logon ko.

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