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Impact of Exchange Market Forces on Pak-Rupee Exchange Rates during Globalization Period: An Empirical Analysis

Author

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  • Syed Adnan Haider Ali Shah Bukhari

    (Corresponding Author: Senior Research Fellow, Faculty of Computer Sciences and I.T. Department of Computer Sciences, FUUAST, Karachi, Pakistan.)

  • Muhammad Shahbaz Akmal

    (Research Scholar, Associate Professor/Senior Research Economist, Applied Economics Research Centre, Karachi University, Pakistan.)

  • Mohammad Sabihuddin Butt

    (Associate Professor/Senior Research Economist, Applied Economics Research Centre, Karachi University, Pakistan.)

Abstract

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 todevaluation in the globalization period the monetary authorities in Pakistan were acting to reduce domestic credit; but that c) additional pressurewas 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.

Suggested Citation

  • Syed Adnan Haider Ali Shah Bukhari & Muhammad Shahbaz Akmal & Mohammad Sabihuddin Butt, 2006. "Impact of Exchange Market Forces on Pak-Rupee Exchange Rates during Globalization Period: An Empirical Analysis," Lahore Journal of Economics, Department of Economics, The Lahore School of Economics, vol. 11(1), pages 121-139, Jan-Jun.
    • Handle: RePEc:lje:journl:v:11:y:2006:i:1:p:121-139
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    References listed on IDEAS

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    Cited by:

    1. Hadj Fraj, Salma & Hamdaoui, Mekki & Maktouf, Samir, 2018. "Governance and economic growth: The role of the exchange rate regime," International Economics, Elsevier, vol. 156(C), pages 326-364.

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    More about this item

    Keywords

    Exchange market forces; pegged exchange rates; realignment expectations.;
    All these keywords.

    JEL classification:

    • C53 - Mathematical and Quantitative Methods - - Econometric Modeling - - - Forecasting and Prediction Models; Simulation Methods
    • E58 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Central Banks and Their Policies
    • F31 - International Economics - - International Finance - - - Foreign Exchange
    • F33 - International Economics - - International Finance - - - International Monetary Arrangements and Institutions

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