Exchange Rate and External Competitiveness: A Pakistan Perspective

Competitive exchange rate for rupee is the major driver of international competitiveness, and the State Bank of Pakistan needs to take measures to avoid any overvaluation of Pakistani Rupee, as it affects negatively to the already weaker tradable sector. To avoid ambiguities regarding nature and magnitude of misalignment, the bank should develop its tool for periodic assessment of rupee deviation from its equilibrium value.