What is the Pakistani rupee?

The Pakistani rupee (PKR) – also known as rupaya or rupaye – is the official/national currency of Pakistan. It is the basic unit of money in the South Asian country, and is equivalent to 100 paise. The symbol of the Pakistani rupee is Rs or Rp. 

The word ‘rupee’ is derived from the Hindustani word rupyā, which is also derived from the Sanskrit word rūpya (रूप्य), which means "wrought silver, a coin of silver". 

The State Bank of Pakistan (SBP), the central bank of the country, manages the currency of Pakistan. As of 3 March 2022, one Pakistani rupee (PKR1) was equivalent to $0.005617.

The origin and overview of the Pakistani rupee

The emerging market (EM) currency was introduced to Pakistan after it became independent from British rule in 1947, at which time India and Pakistan became two separate countries.

The Pakistani rupee was pegged to British pound sterling (GBP) before 1982, after which the government of Pakistan implemented a managed float policy. 

At present, Pakistan’s currency is categorised as a ‘managed floater’, which means that the country’s central bank can intervene from time to time to change the direction or the pace of change in the currency’s value. This is helpful in the event of external economic events that  may affect the domestic economy and value of the currency.

One Pakistani rupee means it is made up of 100 paise (or paisa in singular). Therefore, one paisa is equal to 0.01 Pakistani rupee. The Pakistani rupee was decimalised in 1961, which led to the replacement of the 16 annas the rupee was originally divided into. A single rupee then became equivalent in value to 100 paise.

The country currently has several banknotes in circulation with denominations of Rs5, Rs10, Rs20, Rs50, Rs100, Rs500, Rs1,000, and Rs5,000. The country also introduced a smaller Rs5 coin in October 2015 and a Rs10 coin in 2016.

The economy of Pakistan and the Pakistani rupee

A major reason behind the Pakistani rupee not being pegged to any other currency and no other currency being pegged to the Pakistani rupee is due to the volatility in the Pakistani economy. Money in Pakistan, therefore, is not reliant on any other currency, commodity or financial asset. 

Pakistan’s economy has followed a rather volatile growth pattern over the years, including regular boom and bust cycles, before the country attained its current state. 

However, following the onset of the Covid-19 pandemic in early 2020, the Pakistani government began to implement measured policy decisions including monetary and fiscal measures, stringent lockdowns to bring the infections under control, and rapid rollout of vaccinations and other measures, which have helped the country’s economy to move progressively towards sustainable growth.

The current economic recovery in Pakistan (as of FY2021) has been achieved without compromising on internal and external stability. The country’s economy underwent a quick and sustained recovery after a sharp economic decline – generally referred to as a ‘V-shaped recovery’ – as the effect of the pandemic began to wane last year, coupled with the country’s efforts to minimise its impact.