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.
As of July 2021, US $1 is worth roughly 160 PKR.
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 allowed to float freely since 1982. Its value has seen a steady decline in the years since, as Pakistan’s economy has stagnated.
When Pakistan became independent from Britain in 1947, the Pakistani rupee replaced the Indian rupee. Initially, they remained using the British notes and simply stamped “Pakistan” over them until printing their own notes the following year.
The rupee was decimalized in 1961, replacing the 16 annas that the rupee was originally divided into with 100 paise (paisa singular).
Coins denominated in paisa were no longer legal tender after 2013. The 1 rupee coin is the minimum legal tender. Later, on Oct. 15, 2015, a smaller 5 rupee coin was introduced and a Rs. 10 coin was introduced in 2016.
There are a number of banknotes in circulation today: Rs 10, Rs 20, Rs 50, Rs 100, Rs 500, Rs 1000, and Rs 5000. Additionally, there is a 50th anniversary Rs 5 banknote. 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 mayhem. For the next five years, the rupee fell nearly 40% against the British pound, and the cost of imports surged, crippling the already fragile economy. The currency remained under pressure until the turn of the century when the State bank of Pakistan finally lowered interest rates and purchased U.S. dollars to curb the falling value of the currency.
Like most emerging market currencies, the Pakistani rupee plunged during the financial crisis, losing over 20% against the U.S. dollar in 2008. The fall of the rupee was exasperated by its large current account deficit.
Because of the fragility and volatility of its economy, the Pakistani rupee does not have any strong correlations with other currencies, financials, or commodities. Although ranking among the lowest economic growth rates in the 2010s, Pakistan continues to benefit from increased investments from China, and the return of Iran to international markets is expected to boost mutual trade. Additionally, 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 bolster the Pakistani economy through to 2030.
While growth in Pakistan at the end of 2019 was less than projected, a three-year program in conjunction with the International Monetary Fund (IMF) aimed at stabilization and structural reform is promising to address macroeconomic issues.