A Systematic Review of Exchange Rate Studies in the Context of Pakistan

Hafsa Hina
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Hafsa Hina: Pakistan Institute of Development Economics

No 2025:3, PIDE-Working Papers from Pakistan Institute of Development Economics

Abstract: The exchange rate is a crucial indicator of a nations performance in the external sector and influences key macroeconomic variables. In theory, exchange rates should be determined by market forces and reflect economic fundamentals; however, developing economies such as Pakistan often experience significant deviations due to structural weaknesses and policy interventions. This paper reviews the literature on the exchange rate in Pakistan, classifying and summarising the findings on nominal exchange rates, real exchange rates, real effective exchange rates, and foreign exchange market pressures. This review provides a comprehensive understanding of exchange rate policy in Pakistan and its economic implications. The paper concludes by identifying gaps in current research and suggesting areas of future study to address the complexities of exchange rate management in developing economies.

Pages: 45
Date: 2025
New Economics Papers: this item is included in nep-inv and nep-mac
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