Why did Pakistan rupee to dollar stay same between 2000-2005?

[WishLivePak]

Rupee used to float around 57-59 during Musharraf era per Google finance, then it suddenly started rising.

It's same like Saudi royal being 3.75 to dollar all year long.

i remember rupee was tied to sterling pound back in the day before it was allowed to float free and devalued significantly. Was rupee not allowed to float free during Musharraf or is Google finance showing wrong results?

 

[Established_1965]

Rupee used to float around 57-59 during Musharraf era per Google finance, then it suddenly started rising.

It's same like Saudi royal being 3.75 to dollar all year long.

i remember rupee was tied to sterling pound back in the day before it was allowed to float free and devalued significantly. Was rupee not allowed to float free during Musharraf or is Google finance showing wrong results?

In case of Pakistan it should be low inflation or higher interest rate during 2000-2005 .

I'm just speculating

 

[SBD-3]

Rupee used to float around 57-59 during Musharraf era per Google finance, then it suddenly started rising.

It's same like Saudi royal being 3.75 to dollar all year long.

i remember rupee was tied to sterling pound back in the day before it was allowed to float free and devalued significantly. Was rupee not allowed to float free during Musharraf or is Google finance showing wrong results?

It was because of strict imposition of managed float system. The central bank continued to intervene in the market with her own reserves to keep the exchange rate at the same. The cost,however, was the depletion of FX reserves held by Central bank. And as soon as SBP ran out of reserves (in early 2008) PKR soared by ~20 Rs due to heavy speculation and Central bank's inability to combat it and intervene in the market.

 

[WishLivePak]

It was because of strict imposition of managed float system. The central bank continued to intervene in the market with her own reserves to keep the exchange rate at the same. The cost,however, was the depletion of FX reserves held by Central bank. And as soon as SBP ran out of reserves (in early 2008) PKR soared by ~20 Rs due to heavy speculation and Central bank's inability to combat it and intervene in the market.

Our reserves did grow during mush era though. But I do understand that PPP govt started using reserve money for their doings.

Would be great if we can reduce it to 50 rupees in next 10 years since we're heavily dependent on imports.

 

[SBD-3]

Our reserves did grow during mush era though. But I do understand that PPP govt started using reserve money for their doings.

Would be great if we can reduce it to 50 rupees in next 10 years since we're heavily dependent on imports.

Here's a more detailed reply.
PML-N Political Desk | Page 110

 

[niaz]

IMHO, main reason was in flow of US aid in return for the support on WOT plus the rescheduling of foreign debt through efforts by Shaukat Aziz who was well connected in the international banking circles.

Basically, a combination of good luck & skillful finance management.

 

[tahir195]

i am 80% sure that we use SHAHEEN 3 For SLV

 

[Hyde]

It actually did lose value by around 20% in those 5 years but so many factors helped containing it from crisis.

Usd was not doing well against most currencies, after 2002 Pakistan received massive aid and foreign investment, remittances sent by overseas Pakistanis, the sanctions were uplifted from Pakistan and making Pakistan was in the news for good reasons such as making it non nato ally of US and the trust on KSE was restored. USA had spent billions of dollars in Iraq and Afghanistan war so there was hardly any pressure on PKR to maintain the balance. SBD-3 also pointed more reasons about it so I guess it's a combination of many facts

Currency does not only fluctuate on financial reasons, political stability also plays a major role to determine the change