Foreign exchange risk in a managed float regime: A case study of Pakistani rupee

In such regimes, the exchange rate either remains fixed for a given time or moves within a very tight band. What has caused this sudden speculative trading and what can be the consequences of further rupee depreciation?

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Empirical evidence and economic implications ,” Journal of International EconomicsElsevier, vol. Recommended articles Citing articles 0. The situation pakistzni created panic amongst investors who are rushing to buy even more dollars, pushing the price further up.

Foreign exchange risk in a managed float regime: A case study of Pakistani rupee

The pegged arrangements on the other hand can be divided into two main classes; hard pegs and soft pegs. Help us Corrections Found an error or omission? President Alvi to inaugurate local express train service for Karachi on Oct If you are a registered author of this item, you may also want to check the foreifn tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

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Download full text in PDF Download. Hard pegs either eliminate the local currency altogether and the country adopts another international currency, a phenomenon also termed as dollarisation, as observed in European Monetary Union or have currency board arrangements, where the central bank only undertakes the expansion of monetary assets, by ensuring at least per cent backing by the pegged currency reserves.

Dr Shamshad Akhtar, Governor of the State Bank of Pakistan SBPhas claimed that this volatility in the price of rupee does not reflect market fundamentals and is primarily caused by speculative trading.

October 26, Lopsided foreign ties THE tightrope that Pakistan must walk in balancing its interests in relations with predominantly Muslim countries in Furthermore, the inflationary pressures caused by such devaluation will greatly undermine, if not nullify, any such benefit. Pakistan has asked UAE to provide deferred payment facility for oil import, says Qureshi.

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Managed float or price setting – Newspaper –

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Managed float or price setting May 19, To what extent the exchange rate policy can help, if at all, in halting this rupee slide? Pakistani rupee offers an instructive case as it seems to manage its currency mainly against the US dollar, but to a lesser extent against the euro.

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Foreign exchange risk in a managed float regime: The study examines applicability and performance of Value-at-Risk VaR models with respect regume foreign exchange risk assessment within a managed float regime. This manipulation of the peer-review process represents a clear violation of the fundamentals of peer review, our publishing policies, and publishing exchage standards. The results indicate that compared with alternative competing models, the foreign exchange risk is better modeled using VaR based on Extreme Value Theory.

The dangers of further depreciation are looming large on the economy.