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Will Pakistani car prices decrease if the dollar falls?

Ayesha  10 Aug 2022   306
Will Pakistani car prices decrease if the dollar falls?

Will Pakistani car prices decrease if the dollar falls?

The high dollar rate has declined rapidly in the last week due to several reasons like imports has declined, action taken by the State Bank of Pakistan against the dollar hoarders, IMF’s statement that Pakistan has met the condition for release of loan and most importantly there was a positive trend in Pakistan Stock Exchange, due to these reasons there is a decline in the dollar rate.

In the last several months low currency value has affected auto industry the most. Pakistan imports most of the car parts, so increase in the dollar rates and devaluation of Pakistani currency has directly affected the economy. All auto companies have risen their prices in Pakistan in the last month, for instance Suzuki Swift – a hatchback costs Rs.4 million and new Honda RS Turbo price reached up to Rs. 8.1 million, all of this means that dollar rates has direct impact on car prices in Pakistan.

From the last few days dollar rates are in declining trend, like it has been declined from Rs.250 to Rs. 224, but this decline does not means that there will be decline in the car prices as well because car sale dollar – denominated asset which means “ an asset that has an underlying value in dollar terms”. Furthermore, there is high demand for dollar- denominated asset then the cars supply, so the prices would not come down.

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