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THREAD: In the last six months, the Indian Rupee (INR) has depreciated by almost 13%, while the Pakistani Rupee (PKR) has depreciated by almost 7%. The higher rate of depreciation of the INR, at a time when it's economy is far stronger than Pakistan's, indicates coming 1/N 
trouble for the PKR. One must wonder how and why is it possible that Pakistan's currency, at a time when its facing an imminent Balance of Payments crisis, and is set to go into another IMF program, is depreciating less than the INR. Perhaps the SBP is continuing to intervene 2/N
in currency markets to stabilize the value of the PKR. This is a futile policy in my opinion. Given the increase in oil prices in global markets, Pakistan's energy bill, through imported oil and LNG, will increase. This will further increase pressure on the PKR, and it is 3/N
only a matter of time before we see another dramatic decline in the value of the PKR. To date, there has been no inflow of foreign currency from the Saudis, the Emiratis, or the Chinese, which indicates that the IMF bailout is imminent. Regardless of what happens, one can be 4/N
almost certain of the fact that the PKR will dramatically depreciate in the coming months, following which there will be further macroeconomic instability in Pakistan. I wouldn't rule out a test of the 150 level in the coming months. @KhurramHusain @FaseehMangi thoughts?
Turns out that the IMF has made a similar case to Pakistani officials during its most recent visit. According to this report by @etribune, IMF has recommended that the PKR should be allowed to depreciate to at least 145 before the end of the year tribune.com.pk/story/1817743/…
With reports suggesting that a formal request for an IMF program will be made in the coming days, it’s important to consider the implications of a free float of the currency. As mentioned earlier, test of 150 on the cards. dawn.com/news/1437156
And there we have it. PM @ImranKhanPTI has given the go ahead for outreach to the IMF for another bailout. Tough times ahead for average citizens; unpopular decisions will surely upset @PTIofficial base that voted for change. For now, more of the same economic playbook.
In my opinion, this is only the opening salvo. All those arguing that the PKR is at parity with the USD are failing to incorporate the US economy in their analysis, where the economy is roaring and the Fed is going to continue raising interest rates. dawn.com/news/1437844/d…
As these rates tick up, we will see continued outflow of capital from emerging and frontier markets and into developed markets. The strengthening of the dollar, coupled with rising oil prices, will surely put further pressure on the PKR. More volatility ahead!
And today the PKR declined by Rs10 and ended at Rs144 per USD. As I had mentioned weeks ago, the prospects of the Pakistani rupee were dim. Given where the reserves are, wouldn’t rule out another round of depreciation before the IMF program is finalized dawn.com/news/1448575/u…
Just a reminder that the economy is a mess right now, and the PTI govt is relying on old measures to keep the ship afloat. Volatility to continue, and tough days ahead of the IMF program. tribune.com.pk/story/1856916/…
Just a reminder that the economy is a hot mess right now and we don’t have any clarity from the Finance Ministey. Continued reliance on old medicine in a bid to keep the patient stable. This is from @etribune today.
Data > Rhetoric. Today we have more data which suggests that despite the tall claims of the Balance of Payments crisis being over, the economy continues to face major headwinds. Plans to issue a $3bn Eurobond have been shelved and remittances are down by $400m! Source: @etribune
The govt. has been unable to reach an agreement for a $250m WB loan. Reserves stand at under $8bn, and this will add further impetus to depreciate the PKR. Hold onto your seats for the next few weeks. Another surprise depreciation on the horizon! tribune.com.pk/story/1864041/…
Reports of another mini-budget as IMF negotiations continue is further indication that Pakistan's economy is in for a period of slow growth and stabilization. The fiscal adjustments will have an inflationary impact, and the currency may slide further. pakistantoday.com.pk/2018/12/19/gov…
Emerging details of the IMF program signal further tax hikes, cuts to development programs, and tariff increases. Also affirm my view that the PKR will face at least another round of depreciation before the IMF package is announced. tribune.com.pk/story/1870680/…
According to the latest Big Mac Index put together by @TheEconomist, the PKR is overvalued by 17% when compared to the USD. If this gap were to close and parity achieved as per Big Mac Index, PKR would be ~160 per USD. @KhurramHusain economist.com/news/2019/01/1…
Got a lot of grief from exchange rate “experts” on Twitter who kept talking about how REER was at 100 and therefore PKR won’t depreciate further. Well, here you go. More to come in the future as well. dawn.com/news/1482642/d…
For what it’s worth, Pakistanis need to STOP obsessing with the value of their currency. It’s just a price of a commodity and the market dynamics should determine it. Focus on real issues, not where the USD is!
