Tuesday, December 28, 2010

Pakistan’s Recipe to Disaster

As per the latest Moody’s international report, Pakistani Rupee would continue to depreciate versus US dollars; the latest report said that Pakistani Rupee would further depreciate by 15% in 2012 to Rupees 99 a US dollar.

The report set alarming bells across all sections in Pakistan where the people and businesses are hoping for some good times by 2012. Report has also shaken Foreign and Local investor’s confidence from Pakistani Capital Markets and those who were planning to invest in Pakistan for longer-term period.

This report provides good chance for Pakistani people to invest their rupees in places where there are high returns. One of the best avenues is of course the money market, the other one is Gold where they can get higher returns.

But the situation in regional countries is highly surprising; currency rates of countries like India, Bangladesh and Afghanistan are higher in value than Pakistani rupee. No one can forget that just a decade back Indian rupee and Bangladesh Tika were extremely lower in value than Pakistani rupee, and one Pakistani rupee was equal to 10,000 Afghania.

And still Afghanistan is heavily dependent on Pakistan for its food supplies and most of Pakistan’s wheat is smuggled into Afghanistan that causes Inflation inside Pakistan.

Pakistan by pursuing weaker currency policy is on its verge to disaster. Government of Pakistan should take hostile steps to defend its currency and save the economy against IMF as open market operations would kill the economy on just negative perceptions and not fundamentals.

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