“The Pakistan rupee traded 1:1 with the Indian rupee at the time of Independence. As noted, Pakistan chose not to devalue with sterling and the Indian rupee in 1949, which led to the end of the common market which existed with India. Almost six years later, on July 31 1955, Pakistan with IMF approval devalued to Rs.4.76 to the United States dollar, again establishing the same par-value as India.
Pakistan did not respond to the 1966 Indian devaluation although the Pakistan economy had suffered similar shocks, especially the 1965 war with India and natural disasters and civil conflict in East Pakistan. On July 22 1970, a fluctuating tourist rate was introduced, effecting a partial devaluation. Demonetization of bank-notes in June 1971 and the civil conflict leading up to the December 1971 Bangladesh war led to considerable capital flight via the well-developed parallel market where the Pakistan rupee reportedly touched Rs. 25 to the United States dollar.Following the breakdown of the Bretton Woods mechanism as of August 1971, the official Pakistan rupee began to appreciate because of its peg to sterling. In September, Pakistan like India changed its peg from sterling to the dollar, thereby depreciating with the dollar. But Pakistan stayed at the same rate that had trade regime.In May 1972, Pakistan implemented a major exchange reform, unifying existing multiple exchange-rates and declaring a new par
The influence on Pakistan’s exchange-rate policies of India may be separated into different factors. Pakistan’s initial decision in 1949 not to follow the devaluation of sterling and the Indian rupee was seen by Bangladesh. or a response to the fact that India actively began to depreciate at the end of 1981 is hard to tell. In any case, the Pakistan rupee and Indian rupee both depreciated almost in tandem during most of the 1980s The extent of similarity was tested when the Indian rupee moved in the range of -1 to 1 percent, 1-2 percent on either side, and more than 2 percent competitive rate with respect to the Indian rupee — e.g. at 1.32 per Indian in 1986, 1.34 in 1987, 1.30 in 1988, 1.27 in 1989 and 1.24 in 1990. This indicates a distinct change from the 1949 situation when resisting devaluation was seen as a statement of national sovereignty.The large Indian devaluations of 1991 left the Pakistan rupee at 1.06 per Indian, and in 1992 at 0.97. The major changes which have taken place in the Indian exchange-rate regime in 1992 and 1993 have been followed closely by the Pakistan authorities and public.”
Pakistan did not respond to the 1966 Indian devaluation although the Pakistan economy had suffered similar shocks, especially the 1965 war with India and natural disasters and civil conflict in East Pakistan. On July 22 1970, a fluctuating tourist rate was introduced, effecting a partial devaluation. Demonetization of bank-notes in June 1971 and the civil conflict leading up to the December 1971 Bangladesh war led to considerable capital flight via the well-developed parallel market where the Pakistan rupee reportedly touched Rs. 25 to the United States dollar.Following the breakdown of the Bretton Woods mechanism as of August 1971, the official Pakistan rupee began to appreciate because of its peg to sterling. In September, Pakistan like India changed its peg from sterling to the dollar, thereby depreciating with the dollar. But Pakistan stayed at the same rate that had trade regime.In May 1972, Pakistan implemented a major exchange reform, unifying existing multiple exchange-rates and declaring a new par
The influence on Pakistan’s exchange-rate policies of India may be separated into different factors. Pakistan’s initial decision in 1949 not to follow the devaluation of sterling and the Indian rupee was seen by Bangladesh. or a response to the fact that India actively began to depreciate at the end of 1981 is hard to tell. In any case, the Pakistan rupee and Indian rupee both depreciated almost in tandem during most of the 1980s The extent of similarity was tested when the Indian rupee moved in the range of -1 to 1 percent, 1-2 percent on either side, and more than 2 percent competitive rate with respect to the Indian rupee — e.g. at 1.32 per Indian in 1986, 1.34 in 1987, 1.30 in 1988, 1.27 in 1989 and 1.24 in 1990. This indicates a distinct change from the 1949 situation when resisting devaluation was seen as a statement of national sovereignty.The large Indian devaluations of 1991 left the Pakistan rupee at 1.06 per Indian, and in 1992 at 0.97. The major changes which have taken place in the Indian exchange-rate regime in 1992 and 1993 have been followed closely by the Pakistan authorities and public.”
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