What is a better option – keep dollars or invest?
Thursday, December 29, 2011
Mubeshir Ali Kazmi, ACA
This article appeared in Pakistan Accountant July-Sept 2010 issue
Memories are valuable in life. I still remember that day when my uncle gave me a ten US dollar note on my tenth birth day. I could not buy an ice cream from general store against the currency but it did create interest and I started collecting and saving foreign currency notes and coins. I have extended family living broad hence my collection started growing steadily. At that time the rupee was trading about 29.40 to dollar (imagine now when Pak currency has fallen to the lowest level verses dollar on the inter-bank market for buying and selling at almost 86.00.) Graphical representation of Pak rupee value to dollar is as shown in the diagram.
Why is rupee falling so fast? Most economists are of the opinion that the main reasons behind the fall of the rupee are an increased demand for dollars due to a spurt in crude oil prices and the flight of foreign funds from the local markets. Demand for rupees, simultaneously, has dipped because capital inflows are down.
Our currency is staggering in a see-saw fashion and declining trend in the value of Pak rupee is increasing day by day. As a result people have started having foreign currencies at their homes and in bank lockers after purchasing it from the local market. This is another reason of escalating the value of dollar. They believe that keeping dollars and other demanding currencies in their pocket is good option rather than investing it some where else. I have asked number of my friends who are in the know of the matter as to why they are doing this? They simply reply that they do not see a better alternative to invest their money. Sadly, this perception is wrong. There are number of options available in the market at this time even when liquidity crunch has caught our economy in vice-like grip. There are alternative that would not only secure for our savings at very competitive rate but can also contribute to our national economy. I remember what Quaid-e-Azam had rightly said, “Thrift as a national asset is going to play an important part in the building up of the state”. So save and invest in Pakistan saving certificates.
Government of Pakistan has issued number of certificates including Defense Saving Certificates, Special Saving Certificates, Regular Income Certificates and Bahbood Saving Certificates. Among all Bahbood Saving Certificates for senior citizens and widows are more lucrative than others in terms of rate of return that is 14.16% p.a. This return is exempted from deduction of withholding taxes and Zakat and is far better than the annualized rate of increase in dollar historically that is clearly shown in the diagram except for the year 2009. Further, volatility of exchange rate in favorable direction is quite uncertain, however profit against saving certificates would remain definite as finalized at the time of purchase.
Most of the people are not very much aware of the pros and cons of these saving schemes. Normally retired people are interested to place their retirement funds in any one of the schemes offered by saving centers to make ensure their monthly returns. Some people including businessmen who have ability to judge the main risk, that is the cost of opportunity would reluctant to invest in these schemes. Since this kind of securities offer a very low risk, the interest rate is also lower than the ones offered by private entities.
However, still there is a margin of arbitrage gain that an investor can obtain through replacing their investment in dollars with Behbood scheme. In coming future current offering rates of return against these schemes would be decreased as market correction. Where is the best place for our investment in today’s scenario considering all risk factors? I posed this question to my colleagues, peers and market experts. Most of them who continuously watch market dimensions like Mr. Tahir Hussain Raza (Director Finance of Acro Group of Companies), working in financial market for many years agree with this analysis and have suggested the same. This understanding can help anyone to make an informed saving decision and not “putting all eggs in one basket.” On the other hand, this would be a good step to reduce a little portion of the undocumented economy worth Rs.100-200 billion of our country.
About the author:
Mubeshir Ali Kazmi is an economist, writer and a blogger. He can be reached here.
Labels: Economy of Pakistan
posted by S A J Shirazi @ 8:35 AM,
,
Winner of Pakistan Blog Award 2011
Saturday, December 24, 2011
Lahore School of Economics wins Pakistan Blog Award 2011. The Awards were announced during grand and colorful Gala Night held on December23, 2011 in Karachi.
Blogging, or ‘the new marketing and business communication tool’ as it is sometimes referred to, definitely seems to be the future of the Pakistan corporate world. Lahore School blog started on September 20, 2004, when the word blog was not much known, and has come a long way. This blog has become a source of inspiration for large number of Lahore School young scholars and senior faculty members to start their own blogs where they propagate their points of view, talk about topics of interest to themselves and meet like-minded individuals and or take the opportunity to explore subjects they are truly interested in.
And on this occasion, I take the opportunity to call all young scholars and alumni of Lahore School to start their own blogs and join the ever expanding blogosphere.
Labels: Fine Art of Blogging
posted by S A J Shirazi @ 10:49 AM,
,
اردو کے ضرب المثل اشعار۔ایک اہم کتاب ، ایک اہم کارنامہ
Monday, December 19, 2011
راشد اشرف
اردو کے ضرب المثل اشعار۔ایک اہم کتاب ، ایک اہم کارنامہ
نوے برس کے محمد شمس الحق صاحب کو خدا سلامت رکھے کہ باجود اپنی پیرانہ سالی ، زبان زد
عام ہوئے اشعارکی کھوج میں شہر کراچی میں در در بھٹکتے ہیں۔ یہ دو چار برس کی بات نہیں ،اس آشفتہ سری میں وہ پورے ساٹھ برس بتا چکے ہیں۔ آپ سے پہلی ملاقات جناب سید معراج جامی کے گھر اس وقت ہوئی جب ایک روز اتوار کی صبح وہ ہاتھ میں تھیلا لیے آن پہنچے۔ تھیلے سے کتابیں برآمد ہوئیں جنہیں جامی صاحب کو سونپ، ان کے کتب خانے سے کتابوں کی اگلی کھیپ کو کھوجنے کی فکر میں لگ گئے۔ اس سے قبل ایک مرتبہ ان سے فون پر اس وقت بات ہوچکی تھی جب راقم کو ایک شعر کے خالق کی تلاش تھی، شعر یہ تھا
Read more »
posted by S A J Shirazi @ 4:55 PM,
,
Progeny and companions of Imam Husain martyred in Karbala
Saturday, December 17, 2011
Banu Hashim
Hazrat Imaam Hussain Alaye Salaam
Hazrat Abbas Bin Ali Alaye Salaam
Hazrat Ali Akber Bin Hussain Bin Ali Alaye Salaam
Hazrat Ali Asghar Bin Hussain Bin Ali Alaye Salaam
Hazrat Abdullah Bin Ali Alaye Salaam
Hazrat Jafer Bin Ali Alaye Salaam
Hazrat Usman Bin Ali Alaye Salaam
Hazrat Abu Baker Bin Ali Alaye Salaam
Hazrat Abu Baker Bin Hasan Bin Ali Alaye Salaam
Hazrat Qasim Bin Hasan Bin Ali Alaye Salaam
Hazrat Abdullah Bin Hassan Bin Ali Alaye Salaam
Hazrat Aun bin Abdullah Bin Jafer Alaye Salaam
Hazrat Mohammad Bin Abdullah bin Jafer Alaye Salaam
Hazrat Abdullah Bin Muslim Bin Aqeel Alaye Salaam
Hazrat Mohammad BIN Muslim Alaye Salaam
Hazrat Mohammad Bin Saeed bin Aqeel Alaye Salaam
Hazrat Abdul Rehman Bin Aqeel Alaye Salaam
Hazrat Jafer Bin Aqeel Alaye Salaam
Read more »
posted by S A J Shirazi @ 10:22 PM,
,
Geography Comes to Life
Wednesday, December 14, 2011
Introduced in the fall of 2007 and based on the National Geographic Atlas, 8th edition, the Giant Traveling Map of Asia is our largest map. The map’s unique projection, in which the North Pole appears on the map, invites discussion about how the direction of North appears to change depending on your location on the map. The map also features measurements of latitude and longitude, and is an effective tool for teaching how to find a location using coordinates. Students can explore the continent using this educationally powerful and fun map.
Labels: Education
posted by S A J Shirazi @ 10:28 AM,
,
Flood - memories of 2010
Thursday, December 8, 2011
Villagers, displaced by floods, lead their livestock through flood waters on August 22, 2010 in the village of Baseera near Muzaffargarh.
Related: Flood 2010 coverage at Light Within and Logic is Variable
Follow Logic is Variable on Facebook and follow sAJs on Twitter for much more all day long.
Labels: Clicked This, Flood 2010
posted by S A J Shirazi @ 8:58 AM,
,
Best of Blogsphere - Top Ten Blogs – 2010
Thursday, December 1, 2011
I am glad to learn that Logic is Variable has been named number eight in Best of Pakistan Blogsphere - Top Ten Blogs – 2010 list published at Light Within. Thanks for this recognition.
For me, blogs are resources for my writings. More often, I blog informally, sharing impressions, generating ideas and seeing how they invoke reactions, keeping track of others’ work in fields of my interest, or simply ranting or pointing out things that come to my attention. Also, I use blogging as a platform to prune ideas. This is where I meet others and share thoughts.
In addition to my other interests, at Logic is Variable, I keep a record of my articles that appear in print media.
Follow Logic is Variable at Facebook
Labels: About, Fine Art of Blogging
posted by S A J Shirazi @ 9:48 AM,
,
