LAHORE:

Financial globalisation has liberalised the financial/capital account of countries. This liberalisation has provided opportunities to financial/money manager capitalists to look for arbitrage across the world.

They borrow in a country where policy rate is low and invest in a country where policy rate is high provided the exchange rate remains stable. In the jargon, this is known as positive carry trade for the money manager capitalist.

Carry trade is a characteristic feature of financial globalisation where differentials in policy rates provide profitable opportunities to investors/money managers. For instance, policy rates in the US, Australia and Europe are 5.5%, 3.9% and 2.25% respectively while policy rate is at 11% in Pakistan.

The exchange rate has been stabilised so fore

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