Pakistani rupee
The Pakistani rupee (Urdu: پاکستانی روپیہ; sign: ₨; code: PKR) is the official currency of the Islamic Republic of Pakistan, subdivided into 100 paisa.[1][2] It is issued and regulated exclusively by the State Bank of Pakistan, which holds the sole right to produce banknotes as per Section 24 of the State Bank of Pakistan Act.[2] Following the partition of British India in 1947, Pakistan initially circulated overprinted Indian rupee notes under the Pakistan (Monetary System and Reserve Bank) Order, 1947, before the State Bank issued its first original banknotes on 1 March 1949, starting with the 2-rupee denomination.[3] The currency has undergone multiple redesigns for security enhancements, with current legal tender denominations including 10, 20, 50, 100, 500, 1,000, and 5,000 rupees, alongside commemorative issues like the 75-rupee note marking independence anniversaries.[4] Coins in paisa and rupee values are also minted by the State Bank, though smaller denominations see limited circulation due to inflation.[4] The rupee's value has depreciated substantially since inception, reflecting chronic economic challenges such as fiscal deficits and balance-of-payments pressures, with the exchange rate against the US dollar shifting from near parity in the late 1940s to over 270 PKR per USD by 2023.[3][5]
History
Origins and pre-independence context
The territories that formed Pakistan upon independence in 1947 utilized the rupee as the primary unit of currency for centuries, rooted in the monetary traditions of the Indian subcontinent under Mughal and British administrations.[6] Prior to British standardization, local rulers and empires issued silver coins denominated in rupees, with the term "rupee" deriving from the Sanskrit "rupya," signifying wrought silver. In regions like Punjab and Sindh, which became integral to Pakistan, Mughal-era silver rupees circulated widely, often weighing approximately 11.5 grams and serving as a stable medium of exchange.[7] Under British colonial rule, established progressively from the 18th century, the East India Company began minting rupees modeled on existing Mughal designs as early as 1671, transitioning from a disordered variety of local coinages to a more uniform system.[8] By 1835, British India adopted a mono-metallic silver standard centered on the rupee, which was minted at facilities in Calcutta, Bombay, and Madras, ensuring consistency across provinces including those later allocated to Pakistan. This rupee, subdivided into 16 annas or 192 pies, facilitated trade and taxation in areas such as the Punjab Province and Sindh, annexed by the British in 1843 and 1849, respectively.[8] In the princely states within or acceding to Pakistan, such as Bahawalpur and Khairpur, rulers maintained semi-autonomous coinage rights, issuing their own silver and occasionally gold rupees aligned with the British Indian standard to avoid arbitrage. For instance, Bahawalpur State produced silver rupees bearing the nawab's name alongside Islamic inscriptions, circulating alongside imperial currency until accession in 1947.[9] Balochistan's tribal areas and the Khanate of Kalat similarly relied on rupees, often imported or locally struck in silver, reflecting the rupee's dominance despite peripheral governance. Acute silver shortages during World War I prompted the introduction of paper notes in denominations like 1 and 2.5 rupees by the Government of India, which circulated in these regions as well.[8] This pre-independence framework of rupee-based coinage and emerging paper currency provided the foundational monetary infrastructure for the nascent state of Pakistan, with British Indian notes and coins continuing in use immediately post-partition until domestic issuance began.[10]Establishment and early post-independence period
Following Pakistan's independence on August 14, 1947, the new dominion initially continued using Indian rupees issued by the Reserve Bank of India, as no separate currency infrastructure existed.[3] The Pakistan (Monetary System and Reserve Bank) Order, 1947, authorized the overprinting of selected Reserve Bank of India notes with "Government of Pakistan" and "Hakumat-e-Pakistan" to facilitate circulation in Pakistani territory, effective from April 1, 1948, covering denominations of 1, 2, 5, 10, and 100 rupees.[3][11] The State Bank of Pakistan was established on July 1, 1948, assuming responsibility for monetary policy, currency issuance, and banking regulation to achieve economic sovereignty. In parallel, the Government of Pakistan issued its first coins in 1948, retaining the pre-decimal system of 1 rupee = 16 annas = 64 pice, featuring the crescent and star emblem on obverse and denomination values on reverse, minted in nickel, bronze, and copper-nickel.[12] To address immediate needs, emergency banknotes in 5, 10, and 100 rupee denominations were issued by the Government on October 1, 1948, printed by Thomas de la Rue & Company with simple designs including the crescent moon and star, signed by Finance Minister Ghulam Muhammad.[3][11] The State Bank's first regular series began on March 1, 1949, starting with the 2-rupee note printed by Bradbury Wilkinson & Company, signed by Governor Zahid Hussain, depicting Jahangir's tomb; the 1-rupee note followed concurrently, showing the Naulakha Pavilion.[3][11] Higher denominations expanded in the early 1950s: 5- and 10-rupee notes on September 1, 1951, featuring motifs like the Khyber Pass and Shalimar Gardens, also by Thomas de la Rue; the 100-rupee note debuted on September 15, 1953, introducing security features such as watermarks and threads.[3][11] The Pakistani rupee maintained parity with the Indian rupee initially, pegged indirectly to the British pound sterling, with an exchange rate of approximately 3.31 rupees per U.S. dollar until devaluation in September 1949, when Pakistan aligned with India's 30.5% depreciation to 4.76 rupees per dollar to preserve trade competitiveness within the sterling area.[13]Decimalization and key monetary reforms
Pakistan implemented decimalization of the rupee on January 1, 1961, transitioning from the pre-existing subdivision of 16 annas per rupee—each anna further divided into 4 pice—to a metric system where 1 rupee equals 100 paisa.[14] This reform, aligned with global adoption of decimal coinage, simplified arithmetic operations in trade and accounting by eliminating fractional divisions incompatible with base-10 systems.[14] The State Bank of Pakistan issued initial decimal coins in denominations of 1, 5, and 10 paisa in 1961, with 25 and 50 paisa coins following in 1963 to support the new structure.[14] Subsequent monetary reforms addressed evolving economic conditions and circulation efficiency. In June 1971, amid political tensions preceding the secession of East Pakistan, the government demonetized Rs. 100 and Rs. 500 banknotes inscribed with political slogans, introducing a revised series to restore confidence and curb misuse.[3] To accommodate inflation-driven demand for higher-value transactions, the State Bank introduced Rs. 2 coins in 1998, Rs. 5 coins in 2002, and Rs. 10 coins in 2016, phasing out lower-denomination paper equivalents where feasible.[14] Small decimal coins, including those below 1 rupee, were demonetized effective October 1, 2014, as their production costs exceeded face value and usage had declined significantly due to electronic payments and rounding practices.[14] These reforms prioritized practical functionality over symbolic continuity, reflecting causal pressures from inflation, technological shifts in payments, and the need for cost-effective minting, as evidenced by the State Bank's periodic evaluations of coin viability.[14]Devaluations, crises, and recent developments
The Pakistani rupee experienced its initial significant devaluation in 1955, when it was adjusted downward by 57.5% against the British pound amid post-colonial economic adjustments.[15] This was followed in 1956 by a shift in par value from Rs. 2.80 to Rs. 4.76 per U.S. dollar, reflecting efforts to align with international monetary standards and address trade imbalances.[16] A further devaluation occurred in 1972, pegging the rupee at PKR 11 per USD, which aimed to boost exports but contributed to imported inflation pressures.[17] The adoption of a managed floating exchange rate regime in 1982 marked a transition from fixed pegs, leading to cumulative depreciation exceeding 372% against the USD by subsequent decades, driven by persistent current account deficits and external shocks such as oil price surges.[18] Pakistan faced acute currency crises in the late 2000s, exacerbated by the global financial downturn, which strained foreign reserves and prompted interventions by the State Bank of Pakistan (SBP).[19] The most severe recent episode unfolded during the 2022–2024 economic crisis, characterized by a balance-of-payments squeeze, dwindling reserves below $5 billion, and a sharp rupee depreciation of over 50% against the USD, culminating in a record low of 307.75 PKR per USD in September 2023.[20][19] Lifting exchange controls in early 2023 triggered a single-day plunge of 9.6%, amplifying inflation to 38% and eroding purchasing power amid import dependency and fiscal shortfalls.[21] This crisis necessitated an IMF bailout program, which enforced structural reforms including subsidy cuts and tax broadening to restore external viability.[22] Post-2023 stabilization efforts yielded results, with the rupee appreciating 1.186% against the USD by end-2024—the first annual gain in seven years—supported by remittance inflows projected at $29.8 billion for fiscal 2024–25 and improved current account surpluses.[23][24] Foreign exchange reserves rebounded to approximately $19.85 billion by October 2025, while inflation eased to record lows around 4.5%, enabling SBP monetary policy rate cuts to 12% by January 2025.[25][26] The exchange rate stabilized near 281 PKR per USD through mid-2025, though minor losses of 2% since January reflected ongoing vulnerabilities to global commodity prices and domestic policy execution.[27][28] Credit rating upgrades to B- in July 2025 by S&P underscored gradual recovery, contingent on sustained fiscal discipline and export growth.[29]Physical Denominations
Coins
Following independence in 1947, Pakistan initially circulated pre-partition coins until the issuance of its first domestic coins in 1948, which included denominations of 1 pice (bronze), ½ anna and 1 anna (copper-nickel), 2 annas (copper-nickel with square outline), ¼ rupee and ½ rupee (nickel), and 1 rupee (nickel), all featuring a Tughra emblem on the obverse and a crescent and star on the reverse.[30] These adhered to the pre-decimal system where 1 rupee equaled 16 annas and 1 anna equaled 4 pice.[14] In 1961, Pakistan adopted decimalization effective January 1, dividing the rupee into 100 paisa, with initial coins of 1, 5, and 10 paisa introduced that year, followed by 25 and 50 paisa in 1963, and 1 and 2 paisa in May 1964; these smaller denominations, primarily bronze or copper-nickel, were progressively demonetized, with paisa coins ceasing circulation by October 1, 2014.[14][30] The first 1 rupee coin appeared in 1977 to commemorate Dr. Allama Muhammad Iqbal's 100th birth anniversary, marking the shift toward higher-value circulation pieces as inflation eroded smaller units' utility.[14] Subsequent introductions included the 2 rupee coin in 1998, the 5 rupee coin in December 2002, and the 10 rupee coin on October 24, 2016, reflecting adjustments to economic conditions and production costs, with lower denominations transitioning to aluminum in 2008 for lighter weight and reduced expense.[14][30] Current regular circulating coins are the 1, 2, 5, and 10 rupee denominations, minted by the Pakistan Mint under State Bank oversight.| Denomination | Material | Weight (g) | Diameter (mm) | Shape/Edge | Color | Issue Date |
|---|---|---|---|---|---|---|
| 1 Rupee | Aluminum | 1.75 | 20 | Round | White | Nov 20, 2008 |
| 2 Rupees | Aluminum | 2.6 | 22.5 | Round | White | Nov 20, 2008 |
| 5 Rupees | Cu 79%, Zn 20%, Ni 1% | 3 | 18.5 | Round | - | Oct 15, 2015 |
| 10 Rupees | - | 5.5 | 25.5 | Round, serrated | Yellow | Oct 24, 2016 |
Banknotes
Following independence in 1947, Pakistan initially circulated banknotes overprinted with "Government of Pakistan" on Reserve Bank of India issues, including emergency denominations of 5, 10, and 100 rupees printed by De La Rue & Company of Great Britain.[2] The State Bank of Pakistan, established in 1948, issued its first original banknotes on 1 March 1949, beginning with the 2-rupee denomination produced by Bradbury Wilkinson and Company.[3] This marked the inaugural series under SBP authority, featuring simple designs focused on national symbols. Subsequent issuances expanded the range: 5- and 10-rupee notes followed on 1 September 1951, also printed by Thomas de la Rue in Britain.[11] Over decades, denominations evolved to include 50 rupees in 1957, 500 rupees in 1986, 1,000 rupees in 1987, and 5,000 rupees later, alongside periodic reintroductions like the 2-rupee note in 1985.[32] The fifth-generation series commenced on 13 August 2005 with the introduction of the 20-rupee note, incorporating enhanced security features for the first time in that denomination.[12] As of 2025, circulating legal tender banknotes comprise denominations of 10, 20, 50, 100, 500, 1,000, and 5,000 rupees, all polymer-based or paper with advanced anti-counterfeiting elements like optically variable ink (OVI) on select notes such as the 500-rupee variant.[4][2] Commemorative issues include 75-rupee notes marking the 75th anniversary of SBP's founding in 2023 and Pakistan's independence.[33] In January 2024, SBP announced plans for a new banknote series to replace the 2006 designs, with final designs completed by July 2025 and issuance anticipated within two years from initiation, aiming to update security amid ongoing counterfeiting challenges.[34][35]| Denomination | Primary Color | Key Features |
|---|---|---|
| 10 Rupees | Various | Basic security thread, watermark |
| 20 Rupees | Green | Introduced 2005, fifth series |
| 50 Rupees | Red/Purple | Fluorescent elements |
| 100 Rupees | Various | Holographic strip |
| 500 Rupees | Purple | OVI option available |
| 1,000 Rupees | Blue | Advanced intaglio printing |
| 5,000 Rupees | Yellow/Green | Highest denomination, multi-color |