Measuring the significance of economic variables of Pakistan that influence the exchange rate of foreign currency and analysis of the control on fix exchange rates by Central Bank and comparing with larger economy (India)

A simple statistical technique is used to find the magnitude of impact of economic variables that affect the foreign exchange rate of Pakistan, secondary data of last twenty five years (1985–2010) from State Bank of Pakistan for Pound is used. For Euro, data of ten years (2001–2010) is considered (Scrutinized only two main variables for Euro). Workers remittance is proved as most significant factor, but in both cases CPI (Inflation) shows no relation with Pound and Euro when analyzed together with other variables of last twenty five years.