By Umer Raza Bhutta
Over a Long period of time Dollar has seen a rise against the Pak Rupee. Ever since we know, the Rupee has depreciated against the Dollar. There was a time (as when I started noticing) the dollar was as low as 30 PKR, It must surely be lower before, but I was not awake then. Since the time, the dollar with slow and fast pace, while driven through many market forces, lack of any development efforts, strong demand etc. has kept creeping up.
When we visit United States, or go to any internet based shopping arcade and see Dollar price, we immediately multiply it with the corresponding exchange rate. Most of the time it relieves us as the price when converted usually remains low as when the same product is bought from Pakistan in the Pak Rupee. The reason for this is usually that the same product is shipped to Pakistan and different kinds of surcharges are added into it. Anyhow, the dollar keeps going up and at the time of writing of this article it is between 94 and 95 Pak Rupee to one Dollar.
There are many affluent people in Pakistan who maintain a Dollar account. There are many other not so affluent, who want to have a dollar account and maintain some dollar with them as an investment. This has indeed become an investment as someone who bought a dollar when it was 30 Pak Rupee can now get 64 more rupees for each dollar he has. Indeed a good return on the saved money.
But is the depreciation of the Pak Rupee against the Dollar a good sign. Many rather all economist believe, technically as well as socially it is not a good sign. And the situation becomes even grim when we have to make any foreign payments (and usually we do make many foreign payments). Most of these payments are made in Dollar amount. I am not referring to the payments made for smaller consumer items as individuals, but those payments that are made to buy much-needed machinery for manufacturing, any payments of loans, any payments to cover the budgetary constraints, both at governmental as well as private sector level. Now when the dollar to rupee parity increases it becomes expensive in local amount to buy any such product or clear any such loans. The product price might be same in Dollar but when it is converted in to Pak Rupee it takes out a larger chunk from the budget, against that was originally built in the budget. To cover this uncertainty many legal provisions are also kept when making such agreements, such as keeping the dollar value fixed according to the time of agreement. However, arrangements are not very easy to negotiate. When the amount is large in Pak Rupee, it brings larger effort, larger resources and larger mishandling (corruption) to get such product. Thus it raises the bar of the product price in Pak Rupee and affects those who find it hard to maintain even the Pak Rupee account, what to say about the Dollar account. In technical terms this is called inflation. This article is not about how to reduce the dollar to rupee exchange rate or how to curb this inflationary pressure, but it is about another phenomenon.
I was wondering why some affluent and some “wannabe” affluent people insist on having a Dollar account as an investment. They do so in the hope that dollar rupee parity will further worsen, the rupee will further depreciate and thus they will get a larger return on their investment. Honestly any sane person will not hope to get a bad return on it’s investment. If a person has maintained few dollars with itself in the hope that when the dollar rises it will get a better money, why would he wish, hope, pray, think, visualize, anticipate, or even make any little effort towards appreciation of the pak rupee against dollar. In fact, on the other hand the wishes, hope, prayers, thinking, visualization and any effort what so ever is for deprecation of the pak rupee. In doing so we are making an effort for further worsening the value of rupee. We are actually thinking of ourselves alone. At the same time many of us (such people) claim to have patriotism. Yet we forget the fact that we are acting otherwise. We will never hope/Wish/want that dollar drop against rupee as we have our previous earning saved in Dollar. Just thinking aloud, this is not patriotism it is in fact treason, but yet it does not qualify to be tried in any court in the name of treason.