Pakistan has adopted the floating inter-bank exchange rate as the preferred option since 2001. SBP has attempted to maintain real effective exchange rate at a level that keeps the competitiveness of Pakistani exports intact. But, like other Central Banks, it does intervene from time to time to keep stability in the market and smooth excessive fluctuations.
The managed float has served us quite well as it has conferred a degree of certainty and predictability to the economic agents to make informed judgments about the relative movement of the exchange rate. The accumulation of reserves during the last four years has underscored the credibility of the exchange rate policy and minimized excessive speculative activity.