Munich Personal RePEc Archive

Exchange Rate Volatility and Exports of Pakistan

Javaid, shahid hussain (2020): Exchange Rate Volatility and Exports of Pakistan.

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The objective of this note is to examine volatility during the last two decades of four political regimes under flexible exchange rate policy in Pakistan and its relationship with the exports of the country. It examines the exports variability during four core periods of political governments. The volatility in exchange rate has been calculated by using standard deviation. Monthly data has been used and it spans from 2000:1 to 2020:8. The dataset has been obtained from State Bank of Pakistan. The overall volatility in exchange rate during the period of study showed 1.37 and mean value was 0.49. Results reveal that flexible exchange rate (2018:8 -2020:8) has shown highest exchange rate volatility in era four of current government whereas lowest volatility is found during era one of PMLQ regime. However, Overall variability in export was 11.52 and highest variability has been found during the first era of PTI and lowest in PPP government. The correlation results show that exchange rate and export are positively associated during PMLQ and PTI regimes time periods. The study suggests that considering exchange rate policy, it is essential for the political governments to adjust implementation solutions, handle the bottlenecks and create association between exchange rate policy and exports.

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