Accountancy Forum
Pak Rupee Devaluation - Printable Version

+- Accountancy Forum (
+-- Forum: The Profession (
+--- Forum: Economics (
+--- Thread: Pak Rupee Devaluation (/showthread.php?tid=7276)

Pak Rupee Devaluation - Townboy - 01-26-2010

What are the factors responsible for Pak Rupee devaluation

Is it the ongoing world recession?
Is it the hyper Inflation in the country?
Is it current account deficit

Surge in gold prices and depreciation of Dollar against Euro and other currencies of the world. Situation instead of getting better off has gone even worst now in Pakistan. I would like to invite comments from the forum members.

- mjawad - 09-05-2010

At the most basic level, currency is devalued when more of it becomes available (i.e. it is printed out of thin air backed by nothing, like gold or an increase in agricultural or industrial production capacity).

Another reason a currency is devalued is because a country takes loans beyond its capacity to settle them and this is when state bank kicks in to devalue the currency by setting the exchange rate.

Either way devaluation of currency is a way of imposing taxes on her people as it results in loss of wealth / purchasing power of the people.

In my opinion it is the most effective way for the elite to enjoy the fruits of other people's labor.