Business Review


Nuclear tests carried out by Pakistan in May 1998 had a distinctive impact on the evolution of the exchange rate. This case describes what happened to the exchange rate before and after the nuclear tests and focuses on the overall impact of Pakistan’s transition from a hostile relationship with the US in the post-Cold War era to becoming an ally of the US in the war on terror. This case can be used to study the concepts of real and nominal exchange rates, the linkage between exchange rate policy and external balance, how exchange rate can be used as a tool to control the economy and the impact on the economic situation of sustaining a particular exchange rate.


Exchange rate, Economy, Growth, Inflation, Current account, Remittances



Creative Commons License

Creative Commons Attribution 4.0 International License
This work is licensed under a Creative Commons Attribution 4.0 International License.

Published Online

December 21, 2020



Publication Stage



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