Currency Devaluation and Its Impact on Export Growth: The Case of Pakistan

In this study we have intended to examine the impact of the volatility of Pak Rupee on Pakistan's exports during the period of 1993-2006. Our dependent variable was exports while independent variables include exchange rate volatility, inflation, budget deficit, trade balance and currency devaluation. Multiple Regression analysis was used to analyze data. The results show that there is a negative relationship between exchange rate volatility, inflation, budget deficit and exports. However, there is positive relationship between devaluation and trade balance and exports. We suggest to control inflation, budget deficit and keep exchange rate stable.