Managing Foreign Exchange Inflows: An Analysis of Sterilisation in Pakistan
AbstractThe paper evaluates Pakistan’s experience of managing capital inflows witnessed in recent years, particularly after the 9/11 events, which had implications for the conduct of monetary policy. The State Bank of Pakistan intervened in the foreign exchange market by purchasing excess supply, with the objective to contain volatility in exchange rate, and at the same time building up foreign exchange reserves. The market interventions led to surplus rupee liquidity, which had to be sterilised in order to ensure price stability. The paper estimated empirically the sterilisation coefficient by using OLS technique. Sterilisation coefficient for Pakistan during July2000-December2003 was –0.87, indicating that 87 percent of the increase in NFA was sterilised through selling of government securities.
Download InfoIf you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
Bibliographic InfoArticle provided by Pakistan Institute of Development Economics in its journal The Pakistan Development Review.
Volume (Year): 44 (2005)
Issue (Month): 4 ()
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Miller, Norman C & Askin, Sherry S, 1976. "Monetary Policy and the Balance of Payments in Brazil and Chile," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 8(2), pages 227-38, May.
- Pedro Aspe Armella & Rudiger Dornbusch & Maurice Obstfeld, 1983. "Financial Policies and the World Capital Market: The Problem of Latin American Countries," NBER Books, National Bureau of Economic Research, Inc, number arme83-1, October.
- Robert E. Cumby & Maurice Obstfeld, 1984.
"Capital Mobility and the Scope for Sterilization: Mexico in the 1970s,"
NBER Working Papers
0770, National Bureau of Economic Research, Inc.
- Robert E. Cumby & Maurice Obstfeld, 1983. "Capital Mobility and the Scope for Sterilization: Mexico in the 1970s," NBER Chapters, in: Financial Policies and the World Capital Market: The Problem of Latin American Countries, pages 245-276 National Bureau of Economic Research, Inc.
- Robert E. Cumby & Maurice Obstfeld, 1981. "Capital mobility and the scope for sterilization: Mexico in the 1970s," International Finance Discussion Papers 187, Board of Governors of the Federal Reserve System (U.S.).
- Kouri, Pentti J K & Porter, Michael G, 1974. "International Capital Flows and Portfolio Equilibrium," Journal of Political Economy, University of Chicago Press, vol. 82(3), pages 443-67, May/June.
- Waheed, Muhammad, 2007. "Central bank intervention, sterilization and monetary independence: the case of Pakistan," MPRA Paper 2328, University Library of Munich, Germany, revised Mar 2007.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Khurram Iqbal).
If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.
If references are entirely missing, you can add them using this form.
If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.
If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.
Please note that corrections may take a couple of weeks to filter through the various RePEc services.