Saudi Riyal to Pakistan Rupees forex exchange rates.

      The current scenario of a possible war between Pakistan and India can be attributed to the dwindling trade deficit between Pakistan and Saudi Arabia, which is essentially due to the depreciation of the Saudi riyal. Similarly, the current situation in currency market also plays an important role in the fluctuation of Pakistani Rupees. However, the question is how will the Rupee affect Pakistan's GDP?
     The first point is about its impact on the trade deficit. As we all know, trade deficit means that imports are greater than exports. This means that Pakistan is losing out to India mainly due to their large purchases of export goods and their subsequent sale in the domestic markets. In this context, any reduction in exchange rates means a reduction in imports (even for very temporary reason) and the subsequent increase in exports. The indirect impact on GDP can be figured out easily.
     First of all, the Rupee is a highly tradable currency in India. It depreciates when in comparison with the Dollar. The further the exchange rate between the Pound Sterling and the Rupee goes, the more the purchases by Indian Manufactures (in excess of $25 billion annually) will lead to depreciation of Rupee, thereby increasing imports. Thus, this depreciation will help Indian importers to buy imported products at subsidized prices from overseas, which will ultimately help economies grow.
     Secondly, if there is any rise in import, the Rupee will appreciate. This will again encourage Indian exports, which will lead to depreciation of Rupee and rise in imports. This effect is indirect and very slow, as it takes time for Rupees to regain its previous value against the Dollar. However, the Rupees has already depreciated against the Dollar, so we cannot expect any substantial change in the Forex exchange rates until after next month.
     Foreign exchange rates are driven by three main factors. These are economic and political factors. Economic factors include exchange rates between countries, political stability in a particular country and inflation in the domestic economy. Political factors include stable government, low inflation and transparency in exchange markets.
     Economic conditions in Pakistan have been quite poor in past few years. In addition to this, inflation has also been high. Some experts believe that these factors have led foreign investors to move towards currencies like Saudi Rials, Indian Rupees and Greek Pattons. Apparently, this move was possible due to lack of available foreign exchange investment opportunities. Recently, the Government of Pakistan implemented measures to increase foreign currency exchange liquidity, so that foreign investors can again take advantage of the weak exchange rates to invest in Pakistan's domestic market.
     The recent developments in the foreign exchange market were encouraging for investors from Pakistan and other Asian countries. In fact, according to reports, the market is expected to open higher in the coming weeks. This will help both domestic and foreign investors to gain profits. At present, investors from all over Asia are trying hard to obtain maximum return on their investments, due to the prevailing scenario in the economy of Pakistan.
     Another reason for the recent appreciation in the currency rates of Saudi Rials and Indian Rupees is the ongoing tensions between Pakistan and India. Both these nations are fighting against each other for several regions of Kashmir. In addition to this, terrorist activities in Pakistan and Indian Kashmir are also adding fuel to fire. All these factors seem to be supporting the long-term appreciation of Indian Rupees and Saudi Rials. Moreover, the trading scenario between the two currencies is highly predictable. It is believed that future trading prospects of these two currencies are quite bright as the impact of internal problems in Pakistan and Indian Kashmir cannot be ignored.