Determining Pak Rupee Exchange Rates vis-à-vis Six Currencies of the Industrial World: Some Evidence Based on the Traditional Flow Model

Razzaque H. Bhatti


Pak-rupee exchange rates vis-à-vis many currencies of the
industrial world have weakened continuously and persistently since
Pakistan abandoned fixed exchange rates in April 1982. This proposition
is strongly supported by descriptive test statistics, as shown in Table
1, such as mean, standard deviation and coefficient of variation of six
Pak rupee exchange rates—against the U.S. dollar, British pound, German
mark, Japanese yen, Swiss franc and French franc—over the period
1982q1-2000q4. Based on these descriptive statistics, it is evident that
Pak rupee has depreciated persistently against all currencies of the
industrial countries in question over the period under investigation;
for example, it has depreciated by 324.05 percent against the British
pound, 406.360 percent against the U.S. dollar, 344.53 percent against
the French franc, 498.48 percent against the Swiss franc, 477.78 percent
against the German mark and 986.25 percent against the Japanese yen
since April 1982. As evidenced by coefficient of variation, Pak rupee
has weakened enormously against all currencies of the industrial world,
while it has weakened relatively more alarmingly against the Japanese
yen, Swiss franc and German mark.

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