The paper uses the approach of Weymark(1995) for constructing exchange market pressure andintervention index for Pakistan and to account for potentiallinearity. A rolling regression indicates unstable real moneydemand and price equation estimates. Consequently, a Kalmanfilter approach is used for evaluating the effects of structuralchanges on parameter constancy. The results indicate unstablereal money demand and price equation parameters. The evidenceshows downward pressure and active Central Bank intervention.Exchange Market Pressure mean value for the first half is higherthan the second half of the sample period suggesting the postreformperiod as more tranquil
