IF we delve into a bit of details regarding the USD to PKR exchange rate, it’s no news that the USD has always dominated the PKR by a large margin. In fact during the past decade it’s difficult to determine a point where the 1 Dollar to PKR Forex was ever below USD1:PKR100.
Will the Dollar to
Pakaistani Rupee ever devalue? Part of the reason is also that is due to
our adverse balance of payments, which has an ever increasing import
bills (USD to PKR) of
more expensive finished goods and luxury items rather than capital
machinery or skills against declining exports which are mainly based on
low value agriculture products rather than finished goods and that too
in an era where technology/IT products and services are higher value
with a more elastic supply chain. Whilst Pakistan has one of the largest
supply of IT services exports on low value high population natured
services, the truth is that this potential and the relevant amount of
exports to date remains untapped. Not only is the government not
encouraging and establishing a proper infrastructure for such IT related
services, but also the existing law fails to recognize a large scope of
these services due to outdated laws, hence forcing people to keep all
their money earned through this outside the country and such services
not even being included under the scope of exports.
History of USD to
PKR:
With several government changes and each with a polar opposite vision of
how the economy can grow, the currency PKR has more often than not
suffered against the USD due to severe devaluation thanks to how much
the institutions favor high interest rates. USDtoPKR.pk Ever since the
last government came into power in 2018, the USD to PKR
forex started from USD1:PKR139 and gradually increased to USD1:PKR178.
However when the government was changed during the start of the second
quarter, the Dollar rose to an all-time high of Over Rs.240 per Dollar
until this month when the Dollar
to PKR devalued to USD1:PKR218 and is floating around that
point since. Whilst the dollar is not expected to fall anytime soon, the
inflation this increase in USD to PKR has bought about
is bound to devalue the PKR against the USD in the long term unless
drastically efficient and result inducing economic policies accompanied
by massive investment, aggregate supply increase and GDP growth takes
place to stabilize the PKR against the threats it faces both
domestically and internationally.
What is Forex
USD to PKR RATES? A Currency
is one of the most integral building blocks of the economy of any
country used as a medium of exchange, store of value as well as an
accurately quantifiable and quantitative measure to assign value to
things, goods and services. While every country in the global economy
has its own currency, some currencies due to strong economies and
favorable trade policies globally have had a significant reflection of
these strengths in their currency, which have become predominantly
stronger and have an advantage and protection against devaluation due to
purely domestic pressures, thanks to the significant demand overseas as
well. A great example for this can be the US Dollar ($) which has stood
the test of time and fared through the worst American recessions in
history, yet continues to be the most powerful currency in the world
purely due to it being the backbone of global trade.
How is Forex
Determined?
Exchange rates are determined by the Forex policy set by the
government. Dollar to PKR
It can either be the more popular floating exchange rate which used
natural principles of supply and demand of the currency to determine its
value against the world’s other currencies or it can be a fixed or
pegged exchange rate which has the rate pegged or fixed at a specific
country’s currency or a specific value.
The Math behind
Forex:
While on its face Forex rates seem seemingly simple, there is a world of
complex calculations being rendered every second to determine the
exchange rate as at that point in time for every currency against
another for instance the Dollar to PKR
forex rates. Not only is the forex effected by the domestic
macroeconomic indicators of the country of a currency, it also increases
or decreases in response to changes in the currency it is being compared
against. For instance the PKR to USD forex rates may be devalued due to
the current volatile political situation of Pakistan taking its adverse
toll on inflation and purchasing power parity or it may be devalued by
the strengthening of the USD against PKR owing to rapid GDP growth of
USA. Other factors effecting Forex are macroeconomic indicators like
Unemployment, inflation, GDP, interest rates and even speculations about
the performance of a particular economy.