The predictability of a country's exchange rate's movement can be very dangerous because it can shake the markets and disrupt the country's whole economy. As far as I know never in the history of financial markets has any government in the world made its currency exchange rate movement as predictable as has our government that too in only one direction, down! Among other factors, success of today's financial market is hidden in their unpredictability. The market players study a lot of economic fundamentals and political factors in an effort to determine which way the markets might move and then make their bets accordingly. Here in our case, the newly elected government of PML-N has made the investors' job very easy by clearly indicating that Pakistani rupee is going to get weaker and this clear prediction can easily be derived from a document recently signed by government of Pakistan with IMF namely ‘Extended fund facility for a bailout package of US 6.7 billion, ‘as per said IMF agreement.

Pakistan will have to build up additional foreign currency reserves by a hefty amount of US $ 4.4 billion during the current fiscal year ending on June 30, 2014 in order to increase the existing level of US $ 5.162 billion to US$ 9.562 billion. Under the present circumstances, the foreign inflow on account of foreign investment of such a hefty amount of US $ 4.4 billion is highly unlikely. Unfortunately, the rupee was cracking back home in Pakistan's Forex market when country's Prime Minister was making a case on September 27 in New York with top executives of multinational companies of Wall Street to invest in Pakistan.

Although rupee has already lost around 10% of its value during a short period of three months, since the present government of PML-N came into power reportedly investors are liquidating their positions from stock market and other financial markets and buying US dollar from open market because they appear to be convinced that due to above mentioned condition of IMF bailout package the Pakistan's rupee is going to get even weaker.

I am sure economy watchers inside and outside the country must be waiting to hear from the country's Finance Minister as to what was the wisdom of taking an IMF loan which demands to increase Forex reserves. Did the Finance Minister not think before agreeing to this conditionality?

EJAZ AHMAD MAGOON,

Lahore, October 1.