Rupee Woes

Pakistani Rupee. Back in 2019 I got a large order from a public sector customer, material had to be imported. Quotation was submitted somewhere in 2018 when our “now” beloved Miftah Ismail was the finance minister. The exchange rate then was about 110 to a US$. I had an excellent relationship with my supplier, and him knowing that I did not have the financial capability to pay him upfront agreed to credit payment terms.

The client took some time to finalize but eventually did. It was one of the biggest purchase orders of my career and I was over the moon. This was something that would have covered me for the entire year. Material was shipped by the supplierand got delivered. I was waiting to receive my payment from my client so that I could pay my supplier off. That, on one Friday afternoon I came home for my lunch & jumma break. Watching TV while having lunch at my home I saw that the PKR had depreciated by a massive percentage in a single day to settle at somewhere around 135 to 140. I watched in Panic thinking about the payment that had to be made and the loss I would make.

Days that followed had me talking and negotiating with my supplier. Requesting him as to how the Pakistani Rupee had depreciated against the dollar and how I had never imagined that the PKR will depreciate by such a big margin this quickly. Quite honestly it was something unheard of as the rupee had been at 105 to a USD since years. So I tried to convince him that he should eat up some of the loss with me. He eventually agreed. Very kind of him that he did, but made my head bow down in shame.

I made no profit on that order. Paid every single penny that I had received from my customer over to my supplier. It was significantly less than his invoice but the matter got closed. I thought that would be that, time to analyze & strategize how to avoid this in the future and move on.

A few months later another similar payment got due, the bank offered me 141 Pakistani Rupee to a USD. It was a Rupee more than the previous days rate. I remember telling my banker that the rate has increased but asked him to pay and so did he. Guess what? the rupee shot up to 148 the very next day. It was a timely decision, but from 105 to 285 that was only one of the many times that I had not loose any money.  Strategies don’t work out over here, you are forever sailing on rough seas.

Yesterday was a similar sort of a day, it revived my memory. There is very little joy and so much misery in doing business in an unstable economy like Pakistan. Sometimes I think about how wealthy I would have been had I been doing business in a stable economy. As a young guy who had recently graduated and joined his Father’s business I wanted to do some much for the country. I was brimming with confidence but set backs after set backs have drained my brain and have changed my perspective by 180 degree and now I only think about surviving while doing business in Pakistan. 

You can consult me on matters of Imports, Exports, Custom clearance, Taxation, shipping and logistics & Trade documentation.