STATE Bank of Pakistan (SBP) Governor Reza Baqir claimed a few months ago (“Rupee fall benefits expats’ families: Baqir” [Oct 22]) that the depreciation of the rupee against the US dollar had benefitted overseas Pakistanis sending remittances to the country.
Although, after the rupee devaluation, overseas Pakistanis sending home remittances do get higher amount of rupees for each foreign exchange unit remitted to their loved ones, the rising prices of food, electricity, petrol and other essential items of daily use more than offset the gain on exchange rates. On the other hand, those overseas Pakistanis who have invested in the local stock and real estate markets have been adversely affected by the depreciation as the real value of such investments has gone down.
For example, overseas Pakistanis have lost value of their stock market and real estate investments made during the last three years because the currency has been devalued by almost 50 per cent during this period, but there have not been 50pc increases in stock and real estate markets.
So if an overseas Pakistani invested an amount equivalent to, say, $10,000 in real estate and stock markets in Pakistan during the last three years, the value of his/her investments in rupee terms is now much less than $10,000 post-devaluation. In view of these facts and scenario, I struggle to understand how devaluation benefits the overseas Pakistanis. Perhaps the SBP would like to enlighten us on this subject.
