So recently the rupee has been falling against the dollar, and this has raised a storm within the economy as the country seems to have divided opinions.

As a majority, half of the country is blaming the incumbent government for their lack of ability to rule and sustain the economy let alone lead it out of the crisis. While the other half of the country seems to support the Imran led government and is merely asking for some time for the policies to set in. But no one is sure exactly how much time do we need.

And then there are some who do not seem to be bothered by it all – sort of free riders if you may call them. Although the change in rupee/dollar parity will affect them but they are too chill, maybe just too cool to let it all sink in – they are above us all, they are above everything – they are indeed invincible.

But here is the sad part, as most of us debate about the dollar, rupee devaluation, inflation, deficits, loans and bailouts; the majority of Pakistanis are absolutely clue less and yet seem to be affected the most.

The most affected by this economic crisis

I am indeed talking about the labour class, the lowest on the food chain and the illiterate; yet the very fabric of our society that keeps it functioning. The group of people that work hard all day and just about manage to get enough food on the table to keep their stomachs quiet through the night. The poor of the nation are the most affected and sadly we keep ignoring them.

I mean we talk about saving up dollars or even selling them to restore balance within the economy, but we often forget about those who have yet to see a single dollar for the first time in their lives. Given the circumstances of our nation, for us Pakistanis the theme song should be “Dollar dollar karti hai, kyun dollar pe tu marti hai?”

That’s all great and yes, we need to do much more than just talk, write, debate and make false promises before we can bring the poor at par with the rest of the society. But what exactly happened and why are we talking about the dollar so much?

The sad truth that we don’t want to admit

Since the Pakistan Tehreek-e-Insaf government took charge, the economy has been suffering and so are the people of Pakistan. Despite promises of robust policies and the ‘historic’ return of stolen money, the truth is that Pakistan was and sort of still is on the brink of bankruptcy. We as a nation are yet to see billions and billions of stolen monies to be brought back into the economic system of Pakistan, as promised by our beloved Prime Minister Imran Khan.

In short, we borrowed more than we could pay back, and we got greedy.

Indeed, Imran has absolutely no part in the sh*t storm that Pakistan is in currently because he has only come into power some 10 months ago; but his tales of corruption, kickbacks and what nots is yet to unfold. Though the prime example of that has already begun with Peshawar’s BRT and the billion-tree tsunami, which was and still is being so skilfully kept under wraps and tight lips.

United we stand?

The almighty dollar went on a rally against the rupee and the rupee unwillingly had to give in. Last week we saw the rupee drop down to Rs153.5 against the dollar in the interbank market and don’t even ask about the open market. The money sharks ate all the dollars from the market, and you couldn’t even find a single dollar even at Rs170 over the last week.

But behold, the nation came together and started to sell all their dollar holdings to lessen the burden on the economy and apparently it did work. The rupee regained some value and dropped below the Rs150 psychological level against the dollar on Monday this week. And everyone went back to praising the economic policies and the jazba of the nation. Once again our heros in Islamabad were praised and the youthia started bashing everyone else and started chanting idiotic slogans such as ‘2 rupay ki pepsi, PM humara sexy,’ (sometimes I wonder if we should ask Imran to step down from the premiership and try his luck as a model, maybe lux soap would be a great start).

Well enough with my rant. So, what exactly happened?

Market analysts believe that the rupee strengthened on the back of higher inflows of remittance during the Holy month of Ramadan and Eid. Since, Pakistanis stationed abroad remit larger sums during this season.

Interestingly enough, it is also being speculated that although the rupee is gaining against the dollar, it will soon start to depreciate again once the budget announcements come in along with foreign loan repayments.

So, the whole ‘sell your dollars’ drive was for nothing?

In my own opinion, the rupee will appreciate to the Rs148 per dollar level keeping in mind the surge in remittances usually expected around the end of Ramzan and because of the Saudi Loan Facility regarding deferred oil payments easing the pressure on rupee/dollar parity. But it is all short lived and manipulated.

The appreciation or revaluation of rupee is definitely not because of the market forces as believed by the majority. It is being done through state intervention, hidden of course at the moment, with the intent of instilling a sense of calmness, peace and stability amongst the public. The sad part is that the general public is not aware of the effects of depreciation and appreciation. The people in power who were once supporting and advocating depreciation, are now ever so blatantly measuring appreciation as a factor of success. And I wonder why?

The verdict is that the depreciation is inevitable, rupee will continue to fall in value, sooner than later. The demand for dollar has to rise for foreign loan repayments and we do not have enough reserves, hence the need to buy more dollars.

Eventually, this will all be short-lived, and rupee will be back above the Rs150-151 per dollar level.

Sadly enough, yet wise in business terms, even PTI supporters will likely book profits on hoarded dollars and will invest in high yielding fixed income or equities.

What should we do in the future?

Going forward large payments are due in June which will impact our current account deficit (CAD) and reserves position adversely, so be ready for another hike and this time selling your dollars won’t help and neither will your tweets. But maybe before you start to criticise this article, go ask the person on the road who is ever so worried about feeding his kids, how is he planning to lessen the pressure on the economy and ultimately the rupee – maybe dying for the country may help since we will have less poor to worry about.