January 10, 2020 (MLN): Exchange rate is determined by market forces of demand and supply and is a reflection of the existing Balance of Payment (BoP) position.
State Bank of Pakistan (SBP) has said in a tweet that forward exchange rates are determined by the existing spot rates and interest rate differentials of the relevant period i.e. time value of money.
In a series of tweet, SBP apprised that forward exchange rates (ER) are not a forecast of future exchange rates. The report on IMF on Pakistan includes ER assumptions which are not predictions. Under the IMF-supported program, there is no agreed target level for the exchange rate. ER is market-determined.
Moreover, SBP mentioned that IMF-Pakistan had earlier tweeted about the inclusion of exchange rate assumption in its published Staff Report on Pakistan.
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