Re: Taste of new government on economical front
This govt has been in power for little over a month now and you're blaming them for currency devaluation of for last 6 months? How fair of you!!!
BTW, Mush govt was keeping rupee artificially floating around 60 to a dollar for last 6 or 7 years which is not sustainable forever.
Pakistani currency is not managed but convertible currency. It does not have managed exchange rate but convertible exchange rate. Government can lower the exchange rate of such currency (make currency weaker in market) by selling such currency and buying foreign currency, but could not keep the exchange rate higher (make the currency stronger in market) as that would require government to keep selling foreign currency (dollars) and no government have unlimited foreign reserve to support their currency (well, Pakistan reserves was increasing and that means they were keeping the rupee exchange rate undervalued).
I am blaming the devaluation on present government not because of their economic policy but because of investors lack of confidence on present government as Pakistani currency is getting devalued not because of Pakistan economical reason (as that would have shown in stock market too) but because of no confidence on present government and thus resulting in flight of capital from Pakistan.