Pakistani Rupee Its History and Future


The Pakistani rupee has been on a constant roller coaster ride of devaluation. Since its inception, Pakistan’s economy has struggled for its health against the IMF’s heavy debts and the dollar’s depressing power. In the process, causing a steady state of plight in the country.

Inflation, the unpredictability of the currency’s value, and crippling corruption are just some of the problems.

In this article, I aim to provide as much information regarding the nuts and bolts of the currency. Its history, how it’s fairing, and where it’s likely headed.

While also focusing on simplicity to maintain comprehension, below, you will find all the information you need.

A Brief History of the Pakistani Rupee


The word rupaya isn’t a recent term; it has been in circulation since the time of the Indian emperor Sher Shah Suri. Borrowed from Sanskrit, rupaya means silver. It had a silver standard, resulting in

relatively lesser value than currencies operating on the gold standard.

History of Paper Notes

Figure 1 (Old Pakistani Banknotes)

Pakistani Rupee Printed in India

The Pakistani rupee entered circulation after the country’s independence from British rule.

Pakistan’s first currency was issued by the Reserve Bank of India in India. “Government of Pakistan” and “Hukoomat-e-Pakistan” were printed on the white part used for watermarks in English and Urdu.

On April 1, 1948, the Reserve Bank of India issued notes with a denomination of 1, 2, 5, 10, and 100 rupees.

Initially, one dollar was worth 3.31 Pakistani rupees. This was a pretty good ratio because, relative to today, Pakistan’s currency was comparatively valuable. The 1 rupee wasn’t the minimum legal tender, which puts things into perspective. Since then, the mismanagement of the economy has only created rifts between the two currencies.

State Bank of Pakistan as the Issuer

The State Bank of Pakistan issued banknotes for the first time on October 1, 1948. They had values of 5, 10, and 100 rupees.

On 1st March 1948, the 1 and 2 rupee notes were issued.

The 5, 10, and 100 rupee notes were to be redesigned and issued by the State Bank of Pakistan. They came with a watermark and a print of the Quaid-e-Azam this time. In comparison, the initial notes had either a watermark or a print of the crescent moon and star. A signifier of Islam as a central part of Pakistan’s identity.

The Pakistani rupee once had Bengali printed on top when the country was still a part of Pakistan. But after its independence in 1971, it had to be removed. By then, the 5, 10, and 50 rupee notes had already been introduced. The 500 rupee note was introduced in 1986, followed by the 1000 rupee note in 1987. The 20 and 5000 rupee notes were injected into circulation in 2005 and 2006, respectively. The increase in larger legal tenders signified the devaluation of the rupee.

History of Coins

Figure 2 (Old Pakistani Coins)

Given that they had relatively more value, a coin was divided into different segments. For instance, a coin of 1 rupee comprises 16 ana, each having four paisa. By calculation, a 1 rupee coin then contained some 64 paise. The coins in circulation at the time were 1 rupee, then 1, 2, 4, and 8, along with 1 and 2 paisa.

By the end of the 1960s, the 5, 10, and 25 paise were issued. The one and 2-rupee coins were introduced much later, in 1979. The paisa slowly started to disappear when the one paisa coin was last produced in 1976 and the two paisa coin in 1998. An indicator of the devaluation of the rupee.

The 5 rupee coin was introduced in 2002. It was remodeled in 2015, with its weight reduced and its color changed to golden. A year or two earlier, the 1-rupee coin was hallmarked as the minimum legal tender. In 2016, the 10 rupee coin was also introduced, which is rarely used.

Pakistani Rupee against the US Dollar

Back in July, the rupee lost almost 14% of its value when it crashed to 240 per US dollar. which, according to experts, was the lowest since 1989. Consequently, it improved slightly by August after securing 230 against the USD. The currency has a failed history of devaluing the buck.

Why Is the Pakistani Rupee So Run-Down?

Figure 3 (Graph of PKR to USD, Dated: 5th August 2022)

Why is the Pakistani rupee falling? The answer isn’t single-factored.

Larger legal tenders show that the country’s products aren’t available for lower prices. As should be obvious, the Pakistani rupee’s rate has ever been rising (as seen from the graph). Which only exhibits its devaluation throughout the years.

Here are only some of the factors that have affected its value.

Political Instability

The then army chief Ayub Khan overthrew the very first president of Pakistan. And since then, it has become a norm. Pakistan has constantly been overwhelmed by such political clashes.

Martial law impositions and oppositions creating hurdles for the government have certainly impacted the economy’s mismanagement, debilitating the Pakistani rupee in the process.

Nationalization of Industries

Under Zulfiqar Ali Bhutto’s reign, more than 30 industries were nationalized. Which only means that the government took over private businesses. This eventually led to drawing investments out of the country, fearing the government might take another similar step. Although the industries were later privatized again, the damage was already done.

Transition into Floating Currency

In 1982, General Zia-Ul-Haq converted the Pakistani rupee to a floating currency, whereas before, it was pegged to British sterling. This was a blow to the industrial base of Pakistan, as it wasn’t operating on a stable currency.

Fiscal and Current Account Deficits

When more money is sent out of the country than it receives, it is called the current account deficit. At the same time, a fiscal deficit is when a country’s expenses exceed its budget. As per the Al-Jazeera report,

Pakistan is stuck in this twin quicksand, causing the rupee devaluation.

Future of the Pakistani Rupee

Figure 4 (Forecast Graph of Pakistani Rupee Against USD)

A currency’s forecast isn’t a matter of guessing. Using algorithms that analyze market cycles, change rates, etc., the Pakistani rupee is expected to steadily depreciate against the greenback by the end of the year. The USD/PKR history from 1947 to 2022 has continuously seen a bullish trend. This article contains an extensive table of forecasts regarding the PKR against the USD.