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IMPACT OF FREEZING OF FCAS: THE CASE OF PAKISTAN

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Author(s): Hafiz Abdur Rashi | Ali Raz | Syed Usman Izhar | Muhammad Waqas Baig

Journal: Australian Journal of Business and Management Research
ISSN 1839-0846

Volume: 1;
Issue: 6;
Start page: 1;
Date: 2011;
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Keywords: FCAs | foreign exchange reserves | balance of payment | foreign investment | debt | Pakistan

ABSTRACT
Foreign investment and foreign exchange reserves have ample importance for developing countries. So, there is a needed to encourage the foreign and domestic investors whose confidence was suffer by the unexpected decision of freezing of FCAs. The purpose of this study was to identify the areas that were affected after the decision of freezing of FCAs. Moreover, the impact of freezing decision on economy of Pakistan also indicated. More sophisticated impact on banking sector, balance of payment, foreign exchange reserves, foreign debt, and foreign investment. Study found the negative impact of freezing decision of FCAs on foreign banking and positive impact on domestic banking but Pakistan banking sector was disconnected from the international banking; insatiability in balance of payment was increased; the foreign investment and exports was reduced.Resultantly, foreign exchange reserves were reduced and foreign exchange rates was increased. Therefore, it is suggested to increase the confidence of foreign investors in order to increase the foreign investment and foreign exchange reserves. Discussion of conclusions and recommendations were also provided.
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