Loss of confidence in the pakistani rupee

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Reference no: EM132624201

Question 1: During the asian crisis, some asian central banks raised their interest rates to prevent their currencies from weakening. Yet, the currencies weakened anyway. Offer your opinion as to why the central banks efforts did not work?

Question 2:

How do you think the loss of confidence in the pakistani rupee, evidenced by the withdrawal of funds from pakistan, has affected the rupee value? Would a foreign MNC be affected by the change in value, given that customer's commitment is unknown?

Question 3:

Assume that state bank of pakistan wishes to prevent a withdrawal of funds from its country in order to prevent further changes in the currency's value. How could it accomplish this objective using interest rates?

Reference no: EM132624201

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