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.
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 companys 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 divide 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.
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 economy of Pakistan has endured decades of domestic political feuds, a fast-growing population, varying levels of overseas investment, and an expensive, ongoing border dispute with India. 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.
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.
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.
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