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.
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’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
Reference:
Asad, how does that work? If the dollar is going down shouldn’t the value of rupee against the dollar be going up?
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.
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.
Owais,
You plead, “Pakistan
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,