Open AccessImpact of Exchange Market Forces on Pak-Rupee Exchange Rates during Globalization Period: An Empirical Analysis
Author(s) -
Syed Adnan Haider Ali Shah Bukhari,
Muhammad Akmal,
Mohammad Sabihuddin Butt
Publication year - 2006
Publication title -
the lahore journal of economics
Language(s) - English
Resource type - Journals
eISSN - 1811-5446
pISSN - 1811-5438
DOI - 10.35536/lje.2006.v11.i1.a7
Subject(s) - rupee , devaluation , economics , exchange rate , monetary economics , globalization , liberian dollar , international economics , currency , foreign exchange market , market economy , finance
This paper analyzes the impact of exchange market forces on Pak-Rupee/US dollar exchange rates during the 1965-1971 globalization period. The main findings are that a) the behavior of Pakistan’s fundamentals relative to those of the USA help to explain exchange market forces against the Pak-Rupee; b) during the run up to devaluation in the globalization period the monetary authorities in Pakistan were acting to reduce domestic credit; but that c) additional pressure was brought against the Pak-Rupee from speculative sources. These findings relate to current thinking on the choice of the exchange rate regime as even well behaved fundamentals may not be sufficient to sustain a currency on its peg.