international financial management presentation on project of 4 currencies USD, EUR, JYP and MYRin relation with Pakistan rupees for 10 years respective trends, its reasons and what Pakistan should do to overcome the issues related to his currency.

1. PRESENTED TO:
RESPECTED SIR NAVEED AHMED
PRESENTED BY:
MARYAM REHMAN
AROOJ TARIQ

3. Purpose and significance
The purpose of this project is to evaluate the exchange rates of Pakistan
Rupees in four currencies USD, EURO, MYR and JYP and also cross
exchange rates between these currencies. This is to analyze the trends,
causes and their consequences in appreciation or depreciation of the
currencies within the past 10 years(1st july2005 - 31st march2015). This
project’s main focus remains Pakistani Currency and it helps in assessing
the movements of Rupee and making valuable recommendations for
future.

4. Introduction to Currencies
 When companies conduct business across borders, they must deal in foreign
currencies. They exchange foreign currencies for home currencies when dealing
with receivables and also for payables. All this is done at the current exchange
rate between the two countries.
 The need to exchange currencies is the primary reason for the survival of forex
market as largest and most liquid financial market in the world. Forex markets
are based on the exchange rates for trading the currencies.
 Exchange rates are basically the prices of one currency in terms of other
currencies driven by the normal forces of supply and demand. There are a fixed
number of Euros, Dollars, Yen, etc. issued at any given time (although
governments can and do print extra money to buy other currencies and impact
their currencies value). As the demand increases or decreases for any single
currency, it drives the clearing price for that currency.

5. Introduction to Currencies
 US Dollaris the official currency of the United States and its overseas
territories. It is by far the most widely traded currency in the international
transactions.

6. Introduction to Currencies
 The Euro is the official currency of 16 of the 27 member states of the
European Union. It is the second most traded currency in the world. The
Euro has a strong international presence like the US Dollar and has
emerged as one of the most premier currencies.

7. Introduction to Currencies
 The Japanese Yen is the third most traded currency in the world. The
word yen stand for “round object” in Japanese. The Yen is very liquid
around the world and has much smaller international presence than the
USD and Euro.

8. Introduction to Currencies
 The Malaysian Ringgit is the currency of Malaysia. Formally it was
known as Malaysian Dollar and pegged with US Dollar.

9. Exchange Rate in RupeesYear
2005-2006
2006-2007
2007-2008
2008-2009
2009-2010
2010-2011
2011-2012
2012-2013
2013-2014
2014-2015
RATE (Average)
USD (Rupee)
59.8726
60.6418
62.6504
78.6526
83.8854
85.5640
89.2670
96.8536
102.8765
101.3320
RATE (Average) RATE (Average)
EUR (Rupee) MYR
(Rupee)
72.9392 16.0578
79.2328 17.0766
92.4032 18.9416
107.8219 22.3727
116.8823 24.8028
117.1387 27.8008
119.5940 28.9503
125.3828 31.4404
134.3264 31.6969
124.8887 29.9256
RATE (Average)
JYP (Rupee)
0.5216
0.5119
0.5719
0.8008
0.9164
1.0323
1.1363
1.1101
1.0179
0.9029

10. USD (Rupee)
Year RATE (Average)
USD (Rupee)
2005-2006 59.8726
2006-2007 60.6418
2007-2008 62.6504
2008-2009 78.6526
2009-2010 83.8854
2010-2011 85.5640
2011-2012 89.2670
2012-2013 96.8536
2013-2014 102.8765
2014-2015 101.3320
As the above graph shows rupee is continuously depreciated against USD throughout 2005 till
March 2015. There is not a single value that shows appreciation of rupee.

11. EUR (Rupee)
Year RATE (Average)
EUR (Rupee)
2005-2006 72.9392
2006-2007 79.2328
2007-2008 92.4032
2008-2009 107.8219
2009-2010 116.8823
2010-2011 117.1387
2011-2012 119.5940
2012-2013 125.3828
2013-2014 134.3264
2014-2015 124.8887
PKR is continuously depreciated throughout all the years against EUR. From last of 2014 till March
2015 the value of EUR goes down from 134 to 124.

12. JYP (Rupee)
Year RATE (Average)
JYP (Rupee)
2005-2006 0.5216
2006-2007 0.5119
2007-2008 0.5719
2008-2009 0.8008
2009-2010 0.9164
2010-2011 1.0323
2011-2012 1.1363
2012-2013 1.1101
2013-2014 1.0179
2014-2015 0.9029
-
0.2000
0.4000
0.6000
0.8000
1.0000
1.2000
2005-2006 2006-2007 2007-2008 2008-2009 2009-2010 2010-2011 2011-2012 2012-2013 2013-2014 2014-2015
Value of JYP in Rupee
(2005-2015)
As we saw in this graph that rupee continuously depreciated against JYP from 2005 till 2012.
Since 2013 rupee goes a little bit high in value as from the previous

13. MYR (Rupee)
Year RATE (Average)
MYR (Rupee)
2005-2006 16.0578
2006-2007 17.0766
2007-2008 18.9416
2008-2009 22.3727
2009-2010 24.8028
2010-2011 27.8008
2011-2012 28.9503
2012-2013 31.4404
2013-2014 31.6969
2014-2015 29.9256
MYR is continuously appreciated against rupee till 2014. In start of 2015 a value of MYR is
reduced a little bit.

14. Complete overview of PKR
In overall scenario, Pakistan is fully depreciated against all the currencies from
last 10 years. This long term devaluation can cause huge economic crisis.
 Inflation and GDP
In 2008 inflation rate reached 12 percent which is unfavorable to growth as total
factor productivity is on decline, agricultural sector is not clicking and energy
prices have broken all records. 2009 is likely to end up with an inflation rate of 17
percent. The inflation rate in Pakistan was recorded at 2.11 percent in April of
2015. There is thus urgency for controlling inflation.
FY 07 FY 08 FY 09 FY 10 FY 11 FY 12 FY 13 FY 14
GDP Growth 5.5 5.0 0.4 2.6 3.6 3.8 3.7 4.1
Inflation 7.8 12.0 17.0 10.1 13.7 11.0 7.4 8.0

15. Interest Rates and (EDL)
 Interest Rate in Pakistan averaged 12.45 percent from 1992 until 2015,
reaching an all-time high of 20 percent in October of 1996 and a record
low of 7.50 percent in November of 2002.
The State Bank of Pakistan cut its key interest rate for the second
straight meeting by to 8.5 percent in January-2015, citing lower
inflationary pressure due to falling oil prices.
 Pakistan’s external debt and liabilities (EDL)
It include all foreign currency debt contracted by the public and private
sector, as well as foreign exchange liabilities of the State Bank.
Exchange rate is a determinant factor of international transactions.

16. Debt and RESERVES
 Highly indebted nations like Pakistan find it difficult to progress
despite their incessant efforts as a result of fluctuations on the
exchange rates.
 In current scenario, total foreign debt of the country stood at dollar
59.5 billion and depreciation of one rupee per dollar would increase
the debt by Rs59.5 billion
 According to the IMF, Pakistan’s current level of foreign reserves is
critically low at 5.4 billion US dollars, whereas the IMF’s adequacy
metric suggests a level of 14 billion US dollars for countries with a
floating exchange rate
 The low level of reserves leaves the economy susceptible to a number
of triggers that could result in a BoP crisis, similar to in 2008.

17. Devaluation
 The rupee has stabilized in the range of (Rs) 59-60 per dollar till 2006
and May 2007 (Rs60), but after that the currency has started devaluing
since 2007 to date.
 Devaluation may temporarily boost exports only if the demand of
exported goods in the foreign country is price elastic, but this is not
necessary for those goods for which the demand is not price elastic.
 We therefore, should first try to analyze the price elasticity of demand
of goods exported from Pakistan, because experienced has taught that
devaluation did not lead to increase in exports.
 Further to this, it has been observed that successive devaluation in the
past have failed to evoke a favorable long term response in terms of
improved exports. Apart from encouraging speculation it also shatters
the confidence of the foreign investor in the domestic economy.

18. Trade Deficit
 Pakistan recorded a trade deficit of 188772 PKR Million in April of 2015.
 Total exports $30.414 billion (2013-14 est.)
 Total Imports $41.668 billion (2013-14 est.)
 Environment is very unfavorable for long term economic growth due to
low government transparency and economic diversity. An undervalued
currency, high investment flow potential, but very unfavorable business
environment leads to a neutral outlook for Pakistani investments.

19. “Analyzing US Dollar trend from 1st July 2005-
31st March 2015 with respect to EUR, JYP,
MYR”
Year USD/EUR Rate (Average)
1USD=
2005-2006 0.820856275
2006-2007 0.765362459
2007-2008 0.678011133
2008-2009 0.729468165
2009-2010 0.717691327
2010-2011 0.730450831
2011-2012 0.746416782
2012-2013 0.772463401
2013-2014 0.765869821
2014-2015 0.811378766
Comparing the US Dollars to the European EURO, the US Dollar has depreciated between 2007 and 2008. However in
the end of 2008 the USD value started rose until the beginning of 2009 where the USD started depreciating again. From
2011 to 2015 the USD value again rising from its previous value but there is still a difference between the rates of 2005
and march-2015.

20. Analyzing US Dollar trend from 1st July 2005- 31st
March 2015 with respect to EUR, JYP, MYR”
0
0.5
1
1.5
2
2.5
3
3.5
4
2005-2006 2006-2007 2007-2008 2008-2009 2009-2010 2010-2011 2011-2012 2012-2013 2013-2014 2014-2015
Value of USD in MYR
(2005-2015)
Year USD/MYR Rate
(Average)
1USD= MYR
2005-2006 3.72857715
2006-2007 3.551158558
2007-2008 3.307553356
2008-2009 3.515555304
2009-2010 3.382091321
2010-2011 3.0777553
2011-2012 3.083459197
2012-2013 3.080544885
2013-2014 3.245636495
2014-2015 3.38613508
From 2006-2009 USD depreciated against MYR but in the end of 2009 and beginning of 2010 USD
appreciated. As of 2010 – 2013 USD again depreciated and the value of USD again rose till
March-2015.

21. “Analyzing US Dollar trend from 1st July 2005- 31st March
2015 with respect to EUR, JYP, MYR”
0
20
40
60
80
100
120
140
Value of USD in JYP
(2005-2015)
Year USD/JYP Rate
(Average)
1USD= JYP
2005-2006 114.7854636
2006-2007 118.4665406
2007-2008 109.5423662
2008-2009 98.21180284
2009-2010 91.54043017
2010-2011 82.88726628
2011-2012 78.55999945
2012-2013 87.24802862
2013-2014 101.0667805
2014-2015 112.2328919
Since 2007, there has been a downward trend showing the depreciation of the USD against the Japanese Yen. In 2005 the average value
of USD is 114.78 Yen that decreased down to 87.24 Yen in 2013. From 2014 to March2015the value of USD again rose but doesn’t match
the value that is in 2005.

22. Complete overview of USD
 Overall, the US Dollar has been depreciating relative to the other currencies.
There are many factors that are held responsible for the fluctuation of the US
Dollar in relation to those of other currencies with the major one being
supply and demand.
 Real interest rate of USA is 2.0 in 2010, 1.2 in 2011, 1.4 in 2012 and 1.7 in 2013.
This decreasing trend shows that the interest rates in the US is very low and
does not attract buying of the US Dollar.
 Therefore the US Dollar is experiencing low demand which results in its
currency from depreciating.
 in the US, the percentage change in GDP has been decreasing since the
middle of 2007 to -3.8% in 2009, 2.5% in 2010, 1.6% in 2011, 2.3% in 2012 and
2.2% in 2013.
 unemployment rate stood at 5.6 percent in 1990 and it stood at 6.2 percent in
2014.

23. “Analyzing EUR trend from 1st July 2005- 31st March
2015 with respect to USD, JYP, MYR”
0
0.2
0.4
0.6
0.8
1
1.2
1.4
1.6
Value of EUR in USD
(2005-2015)
Year EUR/USD Rate
(Average)
2005-2006 1.218240062
2006-2007 1.306570486
2007-2008 1.474902036
2008-2009 1.370861743
2009-2010 1.393356674
2010-2011 1.369017541
2011-2012 1.339734079
2012-2013 1.294559714
2013-2014 1.305704929
2014-2015 1.232470015
As the above graph shows EUR is appreciating from 2005 till the beginning of 2008
against the USD. Than from 2009 to 2015 Euro reduced its value and not matched the
value as it have in 2007-2008

24. “Analyzing EUR trend from 1st July 2005- 31st March 2015
with respect to USD, JYP, MYR”
0
1
2
3
4
5
6
2005-20062006-20072007-20082008-2009 2009-2010 2010-2011 2011-2012 2012-2013 2013-2014 2014-2015
Value of EUR in MYR
(2005-2015)
Year EUR/MYR Rate
(Average)
2005-2006 4.54230206
2006-2007 4.639838963
2007-2008 4.878317179
2008-2009 4.819340271
2009-2010 4.712459513
2010-2011 4.213500993
2011-2012 4.131015365
2012-2013 3.987949305
2013-2014 4.237843568
2014-2015 4.173309952
From 2005-2009 Euro is continuously appreciating against MYR. Since 2010 to 2015value of EUR
decreased down from previous value. At the end of 2012 and beginning of 2013 EUR have the lower value
from all the years (2005-2015).

25. “Analyzing EUR trend from 1st July 2005- 31st March
2015 with respect to USD, JYP, MYR”
0
20
40
60
80
100
120
140
160
180
2005-2006 2006-2007 2007-2008 2008-2009 2009-2010 2010-2011 2011-2012 2012-2013 2013-2014 2014-2015
Value of EUR in JYP
(2005-2015)
Year EUR/JYP Rate
(Average)
2005-2006 139.8362504
2006-2007 154.7848855
2007-2008 161.564259
2008-2009 134.6348
2009-2010 127.5484693
2010-2011 113.4741215
2011-2012 105.2495085
2012-2013 112.947783
2013-2014 131.9633935
2014-2015 138.323674
As the above graph shows EUR is appreciating from 2006 to 2008 against JYP and lower
its value in the end of 2008 till 2010. Since 2014 to 2015 again EUR goes for high value
but not appreciated as in 2007 to 2008.

26. Complete overview of EUR
 Overall from 2005 to 1st quarter of 2009 EUR is appreciating against the
described three currencies. From the end of 2009 EUR depreciated till 2015.
 Main reason for this depreciation is The Eurozone debt crisis that reduced the
demand of European currency as compared to the previous years.
 The Eurozone debt crisis began in late 2009, when a New Greek government
revealed that previous governments had been misreporting government budget
data.
 Today, many of the concerns related to the Eurozone focus on high levels of
public debt and government deficits in some Eurozone countries.
 Lack of economic growth in the Eurozone, particularly in the periphery, is
making it hard for countries to “grow out” of their debts.
 All nations that operate under the euro system must, by default, have the same
interest rate. This has created strains on some economies, such as Germany.

27. “Analyzing MYR trend from 1st July 2005- 31st March
2015 with respect to USD, JYP, EUR”
Year MYR/USD Rate (Average)
2005-2006 0.268198822
2006-2007 0.28159824
2007-2008 0.302338282
2008-2009 0.284450084
2009-2010 0.295675044
2010-2011 0.32491212
2011-2012 0.324311086
2012-2013 0.324617896
2013-2014 0.308105976
2014-2015 0.295321946
MYR is appreciating from the period 2010 to 2013 against USD. Lowest value of MYR is in the
period of 2005-2006 against USD.

28. “Analyzing MYR trend from 1st July 2005- 31st March
2015 with respect to EUR, JYP, USD”
Year MYR/EUR Rate
(Average)
2005-2006 0.220152686
2006-2007 0.215524721
2007-2008 0.204988721
2008-2009 0.20749728
2009-2010 0.212203415
2010-2011 0.237332328
2011-2012 0.242071237
2012-2013 0.250755444
2013-2014 0.235969069
2014-2015 0.239617956
From the above graph, we know that MYR depreciated till 2009 and appreciated against EUR till
2013. There is a little difference in the value of MYR while appreciating and deprecating against
EUR.

29. “Analyzing MYR trend from 1st July 2005- 31st March
2015 with respect to usd, JYP, EUR”
Year MYR/JYP Rate
(Average)
2005-2006 30.78532615
2006-2007 33.35996932
2007-2008 33.11885084
2008-2009 27.93635553
2009-2010 27.06622072
2010-2011 26.93107743
2011-2012 25.47787872
2012-2013 28.32227151
2013-2014 31.13927906
2014-2015 33.14483601
MYR is appreciated more in the years of 2006, 2007 and 2014. While in the other years MYR
is depreciating against JYP.

30. Complete overview of MYR:
 On July 21, 2005, Bank Negara Malaysia (BNM) announced the end of the
peg to the US dollar, and allowed the ringgit to operate in a managed float
against several major currencies.
 Malaysian economic growth depends largely on international trade.
Estimated exports on 2013 was $230.7 billion and Imports was $192.9 billion.
 Malaysia's economy was one of the most competitive in Asia, ranking 6th in
Asia and 20th in the world, higher than countries like Australia, France and
South Korea.
 Petroleum production is vital to Malaysia's economy, As oil prices have
declined from US$115 in mid–June 2014 to US$69/barrel on December 1st,
2014, investors have started pulling out funds from Malaysia, resulting in a
sharp decline in the value of the ringgit against the US dollar.

31. “Analyzing JYP trend from 1st July 2005- 31st March 2015
with respect to USD, EUR, MYR”
0
0.002
0.004
0.006
0.008
0.01
0.012
0.014
2005-2006 2006-2007 2007-2008 2008-2009 2009-2010 2010-2011 2011-2012 2012-2013 2013-2014 2014-2015
Value of JYP in USD
(2005-2015)
Year JYP/USD Rate
(Average)
2005-2006 0.008711905
2006-2007 0.008441202
2007-2008 0.009128888
2008-2009 0.010182076
2009-2010 0.010924135
2010-2011 0.012064579
2011-2012 0.012729124
2012-2013 0.011461577
2013-2014 0.009894448
2014-2015 0.008910044
As the above graph shows that JYP Yen continuously appreciated against USD from 2005 to beginning
of 2012. Since late 2012 to March-2015 YEN lower its value from the previous.

32. “Analyzing JYP trend from 1st July 2005- 31st March 2015
with respect to USD, JYP, EUR”
0
0.005
0.01
0.015
0.02
0.025
0.03
0.035
0.04
0.045
Value of JYP in MYR
(2005-2015)
Year JYP/MYR Rate
(Average)
2005-2006 0.032483008
2006-2007 0.029976047
2007-2008 0.030194284
2008-2009 0.03579565
2009-2010 0.036946422
2010-2011 0.037131823
2011-2012 0.039249735
2012-2013 0.035307902
2013-2014 0.032113781
2014-2015 0.030170612
JYP Yen depreciated from 2005 to 2008 against MYR and started appreciated from 2009 till 2012. In late 2012 yen
again decreased its value against MYR.

33. “Analyzing JYP trend from 1st July 2005- 31st March 2015
with respect to USD, MYR , EUR”
0
0.001
0.002
0.003
0.004
0.005
0.006
0.007
0.008
0.009
0.01
Value of JYP in EUR
(2005-2015)Year JYP/EUR Rate
(Average)
2005-2006 0.007151221
2006-2007 0.006460579
2007-2008 0.006189488
2008-2009 0.0074
2009-2010 0.007840157
2010-2011 0.008812582
2011-2012 0.009501232
2012-2013 0.008853649
2013-2014 0.007577859
2014-2015 0.00722942
Same trend is shown here as in the JYP- MYR, JYP Yen depreciated from 2005 to 2008 against EUR and
started appreciated from 2009 till 2012. In late 2012 yen again decreased its value against EUR.

34. Complete overview of JYP:
 In Japan, the interest rate has always been very low.
 The inflation rate has been also very low
 The Japanese Yen has been appreciating against the US Dollar from 2005-
2012.
 On the other hand, an extremely low inflation rate and a weaker Yen has
helped the Japanese export sector flourish during this period. In 2007, Japan
had a current account surplus of approximately ¥25 trillion ($227 billion) of
which ¥12.5 trillion ($113 billion) came from its trade surplus against other
countries.
 The value of the Yen will depend on Japanese interest rates relative to other
countries and on the competitiveness of the Japanese export sector.

35. Recommendations FOR Pak RUPEE
 Given the heavy amount of external debt payable, the current continuous
currency depreciation will put heavy burden on the country’s economy.
Therefore, Pakistan should adopt policy of stabilizing the exchange rate,
in order to protect the country against the increase in debt.
 We should try to effectively utilize the human resources, which is
abundant in Pakistan and is under- utilized.
 Cut in government expenditure, improvement in budget and trade deficit,
multiple and persistent exchange rate would also be of great help

36. Recommendations For Pak Rupee
 Devaluation is not the solution of the current economic crisis and should not be
resorted to in future.
 We should increase our exports that cause high interest rate and foreign
exchange rate
 If we increase our exports and decreased imports, it will automatically create a
high demand of rupees around the world.
 The State Bank of Pakistan should demand payments for its exports to be settled
in rupees. However, the federal government needs to stop printing rupees and
balance its budget. Otherwise, would be stolen by the federal government of
Pakistan via inflation. It is high-time the ministry of finance takes notice of
these issues as Pakistan has already passed its point-of-no-return towards
bankruptcy. Let’s save whatever there is left to be saved for future generations to
come.