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Investing in Pakistani Currency (PKR)

When it comes to investing in Pakistan, many people immediately think that would not be worth the risk. Many consider it a country where there is only terrorism, violence and poverty, but Pakistan has great rates of return for those who resolve to invest money in their territory.

The country is one of the markets that promise more concrete results in the Middle East region in coming years. Reasons for this abound, for example: Recently, in 2013, for the first time in Pakistan's history, a democratic government handed over power to another party elected in a natural and lawful manner. The absence of a military coup - common until then - raises the confidence of foreign investors and Pakistanis themselves, creating a very large circulation of money in the country and a great opportunity for real profits.

But even the "bad side” of Pakistan one can find good things. Think: Political stability is good for business, right? Instability can generate a prone business environment as well. It is in these moments of crises and difficulties that companies need to readapt and have the ideal chance for growth. When they show they can handle such change they become “seasoned” and there for more trusted with investment.  Pakistan has consolidated a diversified economy in order to adapt to these moments of difficulty.

Legally the country is also a good place for investments. Very similar to US law, Pakistan has good legal initiatives to protect foreign investors. The two major legal instruments in this regard are the Foreign Private Investment Act, 1976 and the Protection of Economic Reforms Act, 1992. In addition, for those exploring the region as a whole, India and Pakistan have very simple border laws, rather similar to the legal system of the UK.

The Pakistani stock market is managed by the Securities and Exchange Commission of Pakistan (SECP), a solid and reliable company that guarantees stability and security for those who will invest in that country. Furthermore, the country becomes attractive by many other factors, such as:

  • Between 2001 and 2007, poverty levels decreased by about 10%;
  • During 2004 and 2007 GDP growth remained in the 5-8% range, one of the highest growth rates in the world, above even the great development and industrialization of countries. Growth was spurred by gains in sectors such as services and aerospace, software, automobile, textile (responsible for the largest share of Pakistan's exports), shipbuilding, etc. and services.
  • Recently the country has achieved the largest foreign exchange reserves of dollars of its history. There were about 17 billion in the country, invested or not.

Even with a positive outlook ahead, some precautions need to be taken care of, such as inflation, which remains the main concern among the public. She jumped from 7.7% in 2007 to over 13% in 2010 driven by other factors. Another point that inspires care is the devaluation of the rupee Pakistan from 2007 result of the crisis that hit much of the world.

Other challenges include the strengthening of Pakistani rupee against the dollar and the improvement in indices such as education, electricity production, and reducing dependence on foreign revenue entering the country.

Modified:08/29/2015

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