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Currencies |
| PAKISTANI RUPEE |
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| Introduction
| Overview | Structure
| History | Factors
affecting change in exchange rates | Daily
trend of Pakistani rupee | Weekly
trend of Pakistani rupee |
| Introduction |
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Rupee is among the ancient currency units that serve as the
national currency of more than half a dozen Asian countries
including India, Pakistan. Sri Lanka, Nepal, Mauritius,
Seychelles, Indonesia and Maldives. The "Rs" symbol is
usually used to represent the currency unit. The etymology
suggests that the word "rupee" comes from Sanskrit word
"rupyakam" meaning silver. "Paise" that breaks
up 1 unit of currency into 100 equal parts forms the common
subunit of various types of rupee used in these countries.
The official currency of Pakistan is known as
Pakistani rupee that came into use in 1948, almost one year after
the formation of the state of Pakistan. The currency uses the
Indian numbering system for defining the larger values instead of
the western numbering system. International Organization for
Standardization defines the currency code for Pakistani rupee as
PKR and the numeric code as 586 according to its 4217 standard.
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Overview
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Pakistan is counted among the fast developing nations of the
world. One of the "Next Eleven" countries, Pakistan, has
had a positive growth rate since 1951. This itself is an
achievement for a country that was poor when it got independence
and had agriculture as its primary occupation. Though the economy
is still classified as a low income economy by the World Bank, it
has shown constant improvements in growth rate and foreign
exchange position. The country has faced severe threats and
challenges in the political and financial context but then it has
come over these challenges in time. Other than these threats,
Pakistan also faces a serious challenge of rising population and
it already has the sixth-largest population of the world. The
military expenditure of the country also adds up to a low income
left for the development of the economy.
The value of Pakistani rupee, since inception, had been declining
as compared to the value of US dollar until the large current
account surplus made it rise. The value rose too much that it was
affecting the export competitiveness and the government had to
take corrective measures as lower interest rates and buy dollars.
The government policies regarding import-export of currencies
suggest that the local currency up to a value of Rs 3000 can be
imported and exported, the only exception being with India.
Imports and exports of local currency with India is allowed only
up till Rs 500. Any foreign currency can be exchanged freely
without limits.
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Structure
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Pakistani rupee is counted among the currencies
that use the Indian numbering system based on
grouping of 2 decimal places instead of western
numbering system that involve the grouping of 3
decimal places. The subunit in the Pakistani
currency is served by "paise" that
breaks up 1 unit into 100 equal parts. State
Bank of Pakistan looks after the flow of
currency in the country as the central bank.
The currency system in Pakistan consists of both
paper currency and coinage but the dominant
among them is the banknote form. The banknotes
in circulation are in 7 denominations and the
banknote series can be classified as under 2
categories. The first category notes were
printed before 2005 and are now no longer
produced but are still in circulation, a few
smaller denomination notes being withdrawn from
the economy. The second category notes were
printed in and after 2005. The face values in
which the banknotes are circulated in the
country are Rs 10, 20, 50, 100, 500, 1000 and Rs
5000 among which the notes belonging to the 1st
category include face values Rs 10, 50, 100, 500
and Rs 1000 and the notes pertaining to the 2nd
category have face values Rs 10, 20, 100, 500,
1000 and Rs 5000. The size of each note varies
according to their denominations, the higher
value notes being slightly longer. They can also
be differentiated on the basis of their color
schemes that have a separate color predominant
for different face value. Pakistani banknotes
make use of two languages i.e. Urdu on the
obverse side of the notes and English on the
reverse side of the note. All the banknotes,
whether from the 1st or 2nd category have the
portrait image of Muhammad Ali Jinnah on their
front side. The reverse of the notes possesses
various images of the structures and buildings
in the country, the details of which are
mentioned below along with their dominant colors
- Notes that were printed before 2005
-
Notes that were printed
after 2005
A smaller share in the
Pakistani currency system is held by coins. The
coinage is minted in just three denominations
that are Re 1, Rs 2 and Rs 5. There is also an
old version coin of Re 1 in circulation. All the
coins have embossed symbolic illustrations on
their obverse and reverse sides and the face
value of the coins is depicted on their reverse
sides. These 4 coins are minted using different
metals and thus have a different appearance in
context of their colors. The old version of Re 1
coin was minted from cupro-nickel and has a
silvery-white appearance. On the other hand, the
new version is produced using bronze and is
brownish in color. The Rs 2 coin is yellowish in
color as it uses brass for minting and the Rs 5
coin is silvery white in color as it uses cupro-nickel.
The details of images on Pakistan currency coins
are mentioned in the following
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| History |
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Pakistan was a part of India before 1947 when it was
formed as a separate country. The earliest of
evidences of coins in the country suggest that the
history of currency dates back to 2nd century BC.
Indian punch marked coins circulated at that time in
the land what we now known as Pakistan. Also, a few
other coins namely Afghani silver bar coins and
Greek-style coins were also into circulation all this
time. The northern Pakistan was acquired and ruled
over by Mahmud of Ghazna in 9th century AD and this
was the time Arabic coins started to circulate in the
country. Also, coins that were embossed with Arabic
and Devnagari scripts were issued under the reign of
Ghaznavid dynasty. The control over Pakistan
transferred to Ghorids in 1150 till 1203 and then to
Delhi sultans 1203 to 1526. The coinage in metallic
form prominently coins in gold, silver and bronze were
issued under the reign of Delhi sultanate and during
this time only, Sher Shah Suri introduced the
denomination "rupee" that was equal to 40
copper coins. In 1526, Babur defeated the Sultan
of Delhi and Mughals took over the entire region under
the control of the sultanate including Pakistan.
The decline of the Mughal Empire
after Aurangzeb in 18th century left whole of India
with a monetary chaos and the East Indian Company that
had entered Indian subcontinent by that time and was
gaining control gradually, tried to fix this
situation. Under company’s rule, many corrective
steps were taken as the rupee as currency was
standardized. In 1818, the weight of Madras rupee was
assumed to be the standard of the rupee coins all over
India. The country was put on a bimetallic standard
when the British government allowed the use of the
gold mohurs for making government payments though soon
gold mohur as a medium of payment was ceased leaving
India on a silver standard. In 1862, the authority
over India was transferred to Indian colonial
government, which standardized silver rupee as the
national currency and was officially pegged to the
British pound with the establishment of Indian Coinage
and Paper Currency Act in 1899. The Reserve Bank of
India was established in 1935 and took over the
responsibility of issuing currency from the Government
of India.
Pakistan formed an independent
country in 1947 and during the initial months of
independence, used Indian currency with "Pakistan"
stamped on them. The Pakistani rupee was introduced in
1948 with subdivision being "annas" @ 1
rupee = 16 annas. The country decimalized its currency
in 1961 and replaced annas with paise that divides 1
unit into 100 equal parts. Also, special banknotes in
2 denominations for the use of pilgrims going to Saudi
Arabia for "Haj" were issued in May 1950.
though other means of exchange also existed for the
use of the pilgrims, the reason for the issue of
special banknotes was high costs of such mediums and
high rate of illiteracy among the pilgrims. These haj
banknotes circulated till 1994 when they were
withdrawn from the economy.
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| Factors
affecting the exchange rates between two countries
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The volatility in the foreign exchange rates
depends upon a numerous macro economic factors that
have different degrees of importance to different
economies of the world. Some special and exceptional
factors affecting the rates may also exist in the case
of different countries. Following are shown the common
factors on which the foreign exchange rate depends
- Flow of imports and exports between the
countries
- Flow of capital between the countries
- Relative
inflation rates
- Fluctuation limits on exchange rate
imposed by the governments of the countries
- Merchandise trade balance
- Rate of inflation in the country
- Flow of
funds between the countries for the payment of
stock and bond purchases
- Relative growth
- Short term
and long term interest rate differentials
- Cost of borrowings
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