What is the Pakistani Rupee (PKR)?
The Pakistani rupee, abbreviated PKR, is the national currency of Pakistan. The Pakistani rupee is made up of 100 paise and is represented locally by the symbol Rp or Rs. The PKR is often referred to as rupees, rupaya, or rupaye. The word rupee originates from the Sanskrit word rup or rupa, which means “silver” in many Indo-Aryan dialects.
In July 2021, US $ 1 is worth approximately PKR 160.
- The Pakistani Rupee (PKR) is the official currency of Pakistan.
- The PKR was introduced in 1947 after gaining independence from the British and autonomy from India.
- The rupee was initially pegged to the British pound, but has been allowed to float freely since 1982. Its value has seen a steady decline in subsequent years as Pakistan’s economy has stagnated.
Understanding the Pakistani rupee
When Pakistan gained independence from Great Britain in 1947, the Pakistani rupee replaced the Indian rupee. Initially, they continued to use British banknotes and simply stamped “Pakistan” on them until they printed their own banknotes the following year.
The rupee was decimalized in 1961, replacing the 16 annas in which the rupee was originally divided by 100 paise (singular paisa).
Paisa denominated currencies ceased to be legal tender after 2013. The 1 rupee coin is the minimum legal tender. Later on October 15th, 2015, a smaller coin of 5 rupees and Rs. The 10 coin was introduced in 2016.
There are various banknotes in circulation today: Rs 10, Rs 20, Rs 50, Rs 100, Rs 500, Rs 1000 and Rs 5000. Also, there is a 5 rupee note for the 50th anniversary. It commemorates the 50th anniversary of the Independence of Pakistan.
Initially, the rupee was pegged to the British pound. However, in 1982, the government adopted a managed float policy that caused financial chaos. Over the next five years, the rupee fell nearly 40% against the British pound, and the cost of imports soared, crippling the already fragile economy. The currency remained under pressure until the turn of the century, when Pakistan’s state bank finally lowered interest rates and bought US dollars to stem the currency’s decline in value.
Pakistan Economic Outlook
Like most emerging market currencies, the Pakistani rupee collapsed during the financial crisis, losing more than 20% against the US dollar in 2008. The rupee’s decline was exasperated by its large current account deficit.
Due to the fragility and volatility of its economy, the Pakistani rupee does not have strong correlations with other currencies, financial securities or commodities. Although among the lowest economic growth rates in the 2010s, Pakistan continues to benefit from increased investment from China, and Iran’s return to international markets is expected to boost mutual trade. Furthermore, the China-Pakistan Economic Corridor (CPEC), a 3,000-kilometer network of roads, railways, and oil and gas pipelines from Pakistan to China, is expected to boost the Pakistani economy until 2030.
While growth in Pakistan at the end of 2019 was lower than projected, a three-year program in conjunction with the International Monetary Fund (IMF) aimed at stabilization and structural reform promises to address macroeconomic problems.