The uncertainty prevailing in the stock market and the valuation of rupee against dollar has made investors think about an alternative investment opportunity.
The demand for gold increased significantly in the month of August as gold imports doubled to 62 kilograms, up from 32 kilograms in the same month last year. According to Arif Habib Security Analyst, Adnan Agar, gold was the safest option for investors fearing devaluation of rupee despite the fact that Finance Minister Ishaq Dar ruled out any option of devaluation.
But the problem is that, for now, even Ishaq Dar’s position as the Finance Minister is not guaranteed after NAB started corruption investigations against the Federal Minister. This led to different factions demanding resignation of Dar as Finance Minister including the Standing Senate Committee as it was creating a bad name for the country.
Agar believed that investing in gold is by far the safest bet for investors right now, rather than investing in dollars or in the stock market. Gold is termed as a shining asset and is one of the leading commodities in Pakistan as people also get the physical ownership of the asset by investing in gold. Thus, at a time where there is high volatility in the stock market and rupee depreciation is also a possibility, gold is the most viable option for investors who want to play safe.
Devaluation of rupee anytime can cause severe losses to investors if they continue to invest in currency. Last time when the rupee was allowed to ascertain its own position, it depreciated by more than 3% in two hours, trading at Rs. 108 before Ishaq Dar brought it back to Rs. 105. IMF has clearly mentioned that Pakistan’s currency is overvalued by at least 20% and thus if Ishaq Dar departs in the near future, we may see the rupee balloon bursting.