Pakistan’s rupees is at its lowest in the last 71 years

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It is expected that Pakistan’s currency will further devalue with respect to US dollar. There are essentially two groups of investors that are causing the recent downfall. One group is of those investors who keep the cash in dollars, and are waiting to invest when the Rupee loses its value. While the other group of investors is consists of those who’ve Pakistani currency, they’re willing to invest but not doing so, because they prefer investing when the market is not dead or slow.

Despite the fact that Pakistan’s economy is at its lowest in the last 71 years so is the Rupee, the newly formed government is high on hopes to attain the economic stability as soon as possible. In this regard, the government has already taken some serious steps to reduce the government’s operational expenses. Forensic overview of existing development projects and few more decisions will be enough to bring Pakistani currency back to 100 against 1 US dollar in next 24-36 months.

Let’s say if you have 5M rupees ($40K) to invest in real estate for 36 months. And after 36 months there is no increase in the value of your real estate, but on the other hand, Pakistani currency’s value increases to 100, then your RS 5M investment’s dollar value will be $50K a return of 25%.

Now let’s discuss another case, let’s say if your 50 lacs ($40K) plot touches 75 lacs in 36 months, while Rupee increases its worth against US dollar to 100 then in 36 months your return will be 90%. Since 75 lacs will be $75K if Rupee touches 100 against 1 USD.

We have observed in the last 5 years that Pakistani currency has lost the most causing the country’s debts to increase the most in its history. The way our current government has started, it looks like Pakistani currency will gain the most of its lost value in next 5 years or maybe started to perform brilliantly in the next 10 years. At the same time, I am expecting our debts will go down and the current government will pay off its IMF loans that it is anticipating to take in the coming month.

Here are some of the frequently asks questions about the current economic situation and real estate market of the country.

Question by Hammad Ishrat: So you believe PKR will not devaluate any further?

Answer: Yes! It will because IMF for sure put this condition and once IMF loans are approved then start counting. Pakistani Rupee will increase in its value and will gain all of its lost ground in 30 months. The lost value during 2013-18.

Moreover, prime minister Imran Khan has just saved 200 billions of yearly ‘Suwabdeedi Funds’ which last few PMs was distributing without any check and balance.

Dr. Ishrat Hussain is the biggest catalyst with Abdur Razzaq Doud to turn around Pakistan economically.

The newly elected government is working on a war-like situation about how to increase the exports of Pakistani industries that have been exporting, but in the last few years their numbers drastically fell down. During the Musharraf era, textile export was touching 14-15 billion USD, which is now less than $10 billion if I am not wrong.

Pakistan is a small country and to turn around Pakistan’s economy is not a rocket science. Just wait and see.

Question by Babar Salim Khan: Textiles people are exporting more but they keeping their export proceeds abroad unfortunately which is very unpatriotic of them.

Answer: True, but businessmen do this only when he sees real dumb people running the economy and the country. Believe me when the government builds that trust which is badly needed in our business community than believe me you will see the turnaround.

Bad government and governance cause business community to take extreme decisions. Just keep in mind, Ali Baba has invested almost $1 billion in Pakistan in the last few months, and they know the vibrant youth population of Pakistan is their profit.

Question by Muhammad Ahmed: How about people falling in situation 1

Answer: 1.) Those who are waiting to invest once after the further devaluation of Rupee since dollars can buy even an expensive in Rupee or they get a more value once Rupee further devalue. 2.) There are people who think their US dollar will be much more needed and helpful for the Pakistani economy to uplift the Rupees once after the IMF loans. It is still a win-win situation.

Question by Babar Salim Khan: What factors drives prices of Real Estate in Pakistan ? Karachi market is very different from Islamabad and Lahore.

Answer: Same factors drives the market of Karachi that drives the market of New York City, and Los Angeles. Investor, Demand, and Supply.

Question Babar Salim Khan:  Does black money play role in Karachi mostly?

Answer: When you say,’Mostly’ then I assume you mean 51%. Dynamics of black money is not only bribes (Kickbacks, Rishwat, Kala Budget etc.), but also hiding from the tax men. This 51% is not only in Karachi but all across Pakistan since bribes of Punjab, Islamabad and other cities go into their market.

Question: Prices in DHA Karachi is unbelievable. For example, DHA Islamabad doesn’t show the same craziness despite better planned. I’m assuming Islamabad would have more black money and drug money too

Answer: Karachi’s working population is the most financially disciplined in all over Pakistan. People who are able to save money from their salaries are the highest in numbers. And they invest in open plots or apartments. I am talking with actual facts and figures that I have in last 6 year of stewardship here in this group. So, Karachi’s dynamics have everything on top of a real housing crisis. This all contributes to better returns for investors.

Question by Umair Anwar: When will IMF grant us money?

Answer: Paperwork has already started. The next stage is the meetings and the negotiations. So I don’t expect anything in the next 4 weeks. Early October is critical.

Question by Welovelmc: I don’t think rupee will touch 100 again. Cutting expenses are not enough. Cut defense budget and increase the tax base.

Answer: Yes, the current government is going for the whole nine yard to uplift the economy

Question by Mehmood Khairkha:  I don’t understand Pak rupee will fall or rise.

Answer: Pakistan’s currency will gain a significant value by only eliminating the current account deficit. By only doing this Rupee will gain enough strength to get closer to 100. Imagine if we are able to increase taxes and export. As I mentioned earlier today it is not too difficult to turn around the economy if there is a will.

 

Thanks to Mr. Salman. A Usmani for answering the questions. Salman Usmani is an economic-analyst, currently serving as an advisor in the Carlyle Group,  an American multinational private equity, alternative asset management, and financial services corporation.