Pound pounded, rupee ruptured: Is dollar still golden?

 

Pound pounded, rupee ruptured: Is dollar still golden?

Currency exchange rates, as we know, is a zero-sum game - one currency has to lose for the other to gain.

By Vicky Kapur (From the Executive Editor's Desk)

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Published: Wed 26 Jun 2019, 9:00 PM

Last updated: Thu 27 Jun 2019, 5:22 PM

There was this inscrutable energy in the newsroom yesterday, especially among my Pakistani colleagues. Yes, of course, Pakistan had the hitherto-unbeaten New Zealand on the mat in Match 33 of the ongoing ICC World Cup 2019, but it was more than just cricket (disclaimer: the match was only a couple of hours old when this column was written). But just when I thought that that was all of it, the head of KT's Business Desk let me in on a secret that was perhaps the reason for the spring in many an expat's steps.
The Pakistani rupee was trading at its most favourable rate - ever - yesterday, with a UAE dirham fetching more than 43 PKR during the day. "It's like I've got a bonus without actually getting one," he said with a bemused look on his face. Come to think of it, even the Brexit-battered British Pound is trading at a discount to the US dollar (and therefore the UAE dirham), with the forecast "skewed to the downside" according to analysts. As far as the currency derby is concerned, the dollar seems to be back in the saddle, trading higher against most currencies and even safe-haven gold, which has been climbing like there is no tomorrow on the back of trade tensions and regional uncertainties took a breather after surging to a six-year high and let the greenback bask in the limelight yesterday.
Currency exchange rates, as we know, is a zero-sum game - one currency has to lose for the other to gain. But the dollar-peg is a double-edged sword for the UAE, with a strong dollar meaning a higher cost of living (Dubai and Abu Dhabi have both climbed in the Mercer Cost of Living Index this year) even as the peg offers a host of benefits, not least currency stability. Even as there is talk about the US deliberately weakening the greenback, for now, it seems a strong USD will continue to bring smiles on the faces of expats going to remit their earnings.



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