Value of Money___money and Banking

8/3/2019 Value of Money___money and Banking

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MONEY AND BANKING

TOPIC:

VALUE OF MONEY

DIFFERENCE b/w DEPRICIATION AND DEVALUATION

SUBMITTED TO:

MADAM ZUNAIRA AMAN

SUBMITTED BY:

WAQAR YAQOOB #

53

MOHAMMAD ARSLAN # 37


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MONEY AND BANKING

V ALUE OF MONEY

The value of money, therefore has significant importance in the study of all

economic problem.

By value of money is meant its purchasing powerits capacity to commandgoods in exchange for itself.

The value of money varies inversly with the general level of prices.

When the genral prices increases, the value of money falls and when genralprices decreases, the value of money rises.

DEVALUATON OF PAKISTANI CURRENCY

When Musharraf resigned few months back, the Pakistani rupee was hoveringaround Rs. 66 per dollar and oil prices were around $90 per barrel and whenMusharraf was removed, i remember the famous Kamran Khan of Geo Tvshouting with emotions that Pakistan has been saved as dollar has came down toRs. 62 in just one day and that our stock market has risen by 500 points to hoveraround 12000 points. He also cited people coming out on streets to distributesweets and that now our financial and political worries will be overcame in justfew months by our able and God fearing democratically elected representativesand that judges will be restored in few hours, 17th amendment will be removedforever and tribal areas will again become peaceful as their whole war wasdirected against Musharraf.

Standing at this point of time, i wonder which one of the above things haveshown any improvement. The oil prices have increase 50% to 60% after

Musharraf resignation and the stupid logic given was the international oilprices. Now that the international prices are at 15 months low, i wonder what isstopping our government from decreasing the oil prices? The tribal areas areeven more turbulent and the violence has spread to provincial and federalcapital. The dollar is at its record high of Rs. 85.5 and foreign loans are settinganother record by going to around $ 47 billion and expected to cross $50 billionmark in few months. Not only this, the PPP government taxed everything andthe only few things left that they are thinking to tax is water and air. Our friendsare making their last ditch effort to save us from the looming bankruptcy and

default. Judges are still not completely restored and the only accountability we


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MONEY AND BANKING

can see is directed againt the personal rivals of our PPP government. Statefunds are being used on the added security and foreign trips while common manis suffering.

The devaluation is even hurting people in private sector whose salary isdeprecating every day with the depreciation in rupees. Sooner or later braindrain will start occurring as Pakistani intelligentsia will accept very low salariesin foreign currency from other countries. The situation has gone so worse that adelegation from Afghanistan asked my company to set up a meeting in Dubai asIslamabad is no more a safe place to visit. Just imagine, people from Kabulthinks that Islamabad is much worse. With these conditions, i wonder where ourcountry is going to go?

Our politicians have their accounts aborad, they have their children livingabroad and they have their first home abroad and second home in Pakistsan sothey wont find it difficult to run away when Pakistan is in crises and will onlycome back when it is again a safe place. The only people who have to bear the

brunt of everything is the common Pakistanis but the problem with us is thatwe will never have self respect and will credit our traitors as our heroes for thesacrifices which we give ourselves. We should realize the fact that our leadersare doing nothing for us except looting us and keeping us illiterate. We have to

believe in our selves and our abilities and our leadership skills. The Bhuttos,Sharifs, Chaudhries and Maulanas are nothing without the support of the

common man and the problem is that the same common has to beg them laterafter electing them. I wonder if we elect our representatives in elections or ourmasters?

DEVALUATION

Definition


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A substantialdrop in the value of a currency, relative to theprice ofgold or the

currencies of othercountries.

DEPRECIATION

Definition

A decline in the value of a given currency in comparison with other currencies.

For instance, if the U.S. dollardepreciates against the Euro,buyers would have

topay more dollars in order to obtain the originalamount of euros beforedepreciation occurred.

CURRENCY DEPRECIATION

A decline in the value of one currency relative to another currency.Depreciation occurs when, because of a change in exchange rates, a unit of one

currency buys fewer units of another currency.

CURRENCY DEVALUATION

A deliberate downward adjustment in the official exchange rates established, orpegged, by a government against a specified standard, such as another currencyor gold.

DIFFERENCE b/w DEVALUATION &

DEPRICIATION:

There is a difference between devaluation and depriciation.
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Devaluationis a decrease in exchange rate system.It is the result of officialGovernment action

If a country has a floating exchange rate and it allows the external values of its

currency to decrease due to market forces, it is named as Depriciation.

Depriciation is a fall in the rate of domestic currency with foreign.

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Value of Money___money and Banking