What does US Dollar fluctuation mean to overseas Pakistanis?
Zain, I think the example given is incorrect. Strenthening of rupee actually increases the investment value in dollars.
I.e. To keep it simple, let's assume no change in market value of investment.
Rs 10M at 108.50 is $92,165.
Rs 10M at 98.66 is $101,358.
IF US DOLLAR VALUE DOWN WITH PAK RS THE INVESTMENT WILL BE LESS SIMPLY
Stregthening of rupee means appreciation of assets inside country (real estate/PKR bank balance) but depreciation of cash in hand (USD/SAR/AED/etc) and vice versa.
Let me put it this simple way: at the time of investing an overseas Pakistani will benefit if Rupee is cheap i.e @ 108/$ because this will buy more property in Pakistan and at the time of divestment a cheap Dollar will be desirable resulting in a higher dollar amount at the time of repatriation.
For Installment Investors:
If an investor bought a plot for Rs. 1.5m when Dollar rate was 98 ($15,306) and it continued to decline month by month to lets say 108 in 3 years then the overseas investor will benefit as at the end he would have actually paid around $13,888 (Rs. 1.5m). So making a profit of over $1,400 through currency fluctuation.
At the time of investment till all the installments are paid, investor will want the Rupee rate to depreciate (Rs. 108/$) so the same Rupee amount (lets say Rs. 15,000) can be purchased cheaply and cheaply, but when s/he is done with the payments, s/he will PRAY for the dollar to depreciate (Rs. 98/$) and Rupee to appreciate so less Rupees can buy more dollars, resulting in an increase of the net worth of this overseas Pakistani.
Usually (as evident by recent history) the real loser is the society selling plots on installment basis to overseas Pakistanis.
I am agree with Zubair sab,
no any benefit for overseas if dollar is cheap,i am giving one of example which belongs to any overseas about salaries in any currency.
For a example kuwaiti dinar we are calling KD when dollor was 107 at that time 3650=1 million pak rupee now dollor is 98 at this time 3870=1 million pak rupee so we are going in loss 220kd=77000 pak rupee.
who get the benefit?even in Pakistan the prices are same no reduce any price according to my family prices are going high so no benefit for Pakistan or overseas maybe just PMLN or IMF getting benefits.
I benefited from dollar depreciation back in April , I sent 100K US Dollars to USA so $$ depreciation saved me abt 8 lacs at least …Thanks to all mighty , I was lucky
I agree there were some mistakes in the calculations. I apologise for misinterpreting the calculations.
However, I have corrected the calculations accordingly.
Thank you all.
From property investment point of view, currency fluctuation is not good for property investment. Since Pakistan is a high inflation country very rarely a dollar would depreciate against PKR...The current scenario is a bit unstable and I think very soon dollar will regain its strength
As an example if we consider USD will appreciate by 10% annually than if property prices also increase by 10%, there is no benefit for a foreign investor as he would have gained the same by simply keeping the amount in USD account.
Therefore for property investment we have to factor in the local currency depreciation in the equation..
Furthermore it seems The current government Plan is to get heavy loans and use them on non priority projects, most likely this will result in increased inflation thereby depreciating the local currency which will discourage foreign property investments
@s_ch
Recently someone told me that it is difficult to send money out of Pakistan. Is it true?
What channel did you use to remit the money to USA? What is the procedure? Appreciate your input.
Regards