Encash dollars to avoid losses - Ishaq dar

Society Pakistan & World Affairs
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This is the 2nd time in less than two weeks that finance minister vowed to bring down dollar rates. My question is what will he do other than instilling panic in the market. What options does he have and if only creating panic is his plan then how long lasting that impact will be. I was amazed that he didn’t talk at all about improving the value of rupee instead he was talking about bringing dollar down. sounds fishy.

Ishaq Dar urges investors to encash dollars to avoid losses - thenews.com.pk

http://www.dawn.com/news/1073994/dar-vows-to-bring-down-price-of-us-dollar

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Re: Encash dollars to avoid losses - Ishaq dar

Simple, if he can convince people to sell dollars, the value of dollars is bound to go down. By making these statements, he is trying to create a demand for rupee. Following the principal of supply and demand. Pretty clever.

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Re: Encash dollars to avoid losses - Ishaq dar

plain idiocy...have you ever seen a finance minister or state bank Charmian in any country making such childish statements? is this how you control inflation or currency deterioration?

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Re: Encash dollars to avoid losses - Ishaq dar

So you think people living in the world are ch...tya eh.

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Re: Encash dollars to avoid losses - Ishaq dar

not clever, more like dangerous and irresponsible. he is supposed to be a people's representative, not a lying banker.

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Re: Encash dollars to avoid losses - Ishaq dar

he wants everyone's dollars so he and his associates can take it and get 9-2-11 or rafoo chakkar! :D

it's an idiotic statement. i wonder if it was approved by N$. nowhere in the world a minister would make such statements to stir up panic and chaos in the money market.

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Re: Encash dollars to avoid losses - Ishaq dar

I do not think such statements are as foolish as it looks. Sentiments, impressions, and perceptions play a vital role in determining the exchange rate and economy. Flight of capital, devaluation of Pakistan rupee, deterioration of Pakistani economy, and crash of stock market, that started once political thugs got into power in April 2008, was little to do with reality rather most was the result of perceptions, impressions, and market sentiments towards PPP government.

In 2000 a dollar was equal to Rs 60 and in 2008 also a dollar was equal to Rs 60. In 2000 Pakistan external debt was Rs 2400 billion and in 2008 also Pakistan external debt was Rs 2400 billion.

If today a dollar was equal to Rs 60 than Pakistan external debt would have been Rs 3900 billion but rupee devalued to Rs 108 per dollar, and thus debt increased to Rs 7000 billion. So, even though dollar debt increased from ~$40 billion in 2008 to ~$65 billion today (~1.5 times), rupee debt increased from Rs 2400 to Rs 7000 billion, or ~3 times (shows effect of devaluation).

If I could give advice to Pakistan government, then it would be to repatriate Afghans, especially those working or doing business in Pakistan illegally, as they transfer (or have potential to transfer) a lot of open market dollars from Pakistan to Afghanistan. Plus, Pakistan should try to increase export to Afghanistan to increase dollar reserve, as Afghanistan is loaded with dollars (due to American presence in Afghanistan).

It is surprising that Pakistan do not import their energy need from Iran that is next door, just to appease USA and Arab states, when India, China, Central Asian countries, Iraq, Turkey, and even Afghanistan is importing their energy need from Iran.

I believe, Pakistan should start importing electricity, gas and oil from Iran as transport as well as insurance cost would be lowest and Pakistan would save lot of dollars, plus Pakistan can fulfil any energy shortage in Pakistan this way, boosting Pakistan economy, industrial outputs, and exports ...plus, would reduce misery of Pakistanis due to energy shortage Pakistan is going through.

Actually, Pakistan is already importing electricity (35 MW) from Iran for Gwadar at I believe 9 to 10 US cents a unit (as connecting Gwadar with Pakistan national grid is too expensive compared to the requirement of electricity there, hence electricity from Iran). Iran produces more than 75000 MW of electricity, exports electricity to Afghanistan, turkey, Iraq, central Asian countries, and can provide electricity to Pakistan at much lower rate than IPP, and that would be without any financial layout. I believe, Iran offered 10000 MW of electricity to Pakistan in 2012.

Pakistan can fulfil electricity requirements with installed capacity Pakistan has (around 21000 MW) but cost of electricity from IPP is too expensive, hence Pakistan does not. Pakistan electricity requirement is 12000 to 15000 MW that can rise if economy improves. Thus, only requirement to fulfil such demand would be to connect Iran national grid with Pakistan national grid and then Pakistan can get electricity fulfilling all needs, cheaper than IPP. Once Pakistan can start producing electricity using hydro means, Pakistan can stop importing … as it would be cheaper electricity than cost of importing electricity from Iran.

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Re: Encash dollars to avoid losses - Ishaq dar

Many statements by the Fed chairman in US are intended for market consumption and influence. The confidence of traders is influenced by showing the intent, typically by increasing or decreasing interest rates or by buying or selling bonds. However, in this case Dar has not made declaration on the means to achieve what he is claiming as his intent.

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Re: Encash dollars to avoid losses - Ishaq dar

Ishaq Dar is a dangerous man from economic point of view. In early days of PPP government, he was the finance minister and he did similar sort of stuff by saying that Pakistan is at the verge of bankruptcy thus catalyzing the flight of capital from Pakistan.
When Dar issued his first statement in the first week of December, it did have effect on the market and USD dropped from 110 to 107. At 107, it sort of started settling then again he issued that statement. Finance ministry should layout a plan and road map to improve economy of the country. His statements are stupendous when we know that this government minted far more money in less than a year compared to what PPP government did in its 5 years tenure.
He said "We will take steps similar to 1998-99". can someone highlight what were those steps.

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Re: Encash dollars to avoid losses - Ishaq dar

this is simply a stupid statement by ishaq no matter how we dissect it.....what FED chairman delivers in USA is a carefully crafted massage in form of a predictive higher or lower interest rates going forward and the rest of the market subsequently reacts accordingly but what ishaq is saying is simple laughable..he is deliberately asking masses to take an action that will have direct financial consequences both for the individuals and for the government!

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Re: Encash dollars to avoid losses - Ishaq dar

^ I think there will not be any significant impact on price hike. so little impact from that perspective on individuals but people who have cash in foreign currency may suffer.
if we look back, the state bank was asked to buy dollars from the market that coupled with printing bills lowered the rupee value. I think, he wants people to cash dollars thus lowering the exchange rates then state bank and his confidant profiteers will buy dollars at lower rates thus again increasing exchange rates.

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Re: Encash dollars to avoid losses - Ishaq dar

if nothing will change then why are they going nuts over bringing down dollars.
Moreover, they are welcome to bring dollar down to 60 rupees if they promise to bring back the prices of when dollar was equal to 60 rupees.

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Re: Encash dollars to avoid losses - Ishaq dar

This almost amounts to market manipulation, and Im sure that in a mature country, there would be some law enforcement knocking on the door of such a clown for answers.

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Re: Encash dollars to avoid losses - Ishaq dar

what to do when clowns are running the show. :)

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This message is for beloved $ mafia of sharifs not for us.
Apni aukat na bhulo ..voter ho voter he raho.

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Re: Encash dollars to avoid losses - Ishaq dar

Ishaq Dar is "moonchi" of PMLN, so what else you guys were expecting ?

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Re: Encash dollars to avoid losses - Ishaq dar

^ moonchi?

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Re: Encash dollars to avoid losses - Ishaq dar

^^^ I believe 'firenze' means Cobbler (Moonchie ... or shoe repair man)... or maybe munshi (accountant) ... both term is good for Ishaq Dar.

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مُنشی

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Re: Encash dollars to avoid losses - Ishaq dar

the word could be "mochii" = cobbler OR "Munshii" = Accountant