The Pakistani rupee is the official currency of Pakistan. The issuance of the currency
is controlled by the State Bank of Pakistan, the central bank of the country. The most
commonly used symbol for the rupee is Rs, used on receipts when purchasing goods and
services. In Pakistan, the rupee is referred to as the "rupees", "rupaya" or "rupaye".
As standard in Pakistani English, large values of rupees are counted in terms of thousands,
lakh and crore. Several other currencies are also called rupee.
History
The word rūpiya is derived from the Sanskrit word rūpya, which means "wrought silver,
a coin of silver", in origin an adjective meaning "shapely", with a more specific meaning
of "stamped, impressed", whence "coin". It is derived from the noun rūpa "shape, likeness,
image". Rūpaya was used to denote the coin introduced by Sher Shah Suri during his reign
from 1540 to 1545 CE. The Pakistani rupee was put into circulation
in Pakistan after the dissolution of the British Raj in 1947. Initially, Pakistan used British
Indian coins and notes simply over-stamped with "Pakistan". New coins and banknotes were
issued in 1948. Like the Indian rupee, it was originally divided into 16 annas, each
of 4 pice or 12 pie. The currency was decimalised on 1 January 1961, with the rupee subdivided
into 100 pice, renamed paise later the same year. However, coins denominated in paise
have not been issued since 1994. Coins
In 1948, coins were introduced in denominations of 1 pice, ½, 1 and 2 annas, ¼, ½ and 1
rupee. 1 pie coins were added in 1951. In 1961, coins for 1, 5 and 10 pice were issued,
followed later the same year by 1 paisa, 5 and 10 paise coins. In 1963, 10 and 25 paise
coins were introduced, followed by 2 paise the next year. 1 rupee coins were reintroduced
in 1979, followed by 2 rupees in 1998 and 5 rupees in 2002. 2 paise coins were last
minted in 1976, with 1 paisa coins ceasing production in 1979. The 5, 10, 25 and 50 paise
all ceased production in 1996. There are two variations of 2 rupee coins; most have clouds
above the Badshahi Masjid but many don't. The one and two rupee coins were changed to
aluminium in 2007. Paisa coins ceased to be legal tender in 2013, leaving Rs. 1 coin as
the minimum legal tender. Banknotes
On 1 April 1948, provisional notes were issued by the Reserve Bank of India and the Government
of India on behalf of the Government of Pakistan, for use exclusively within Pakistan, without
the possibility of redemption in India. Printed by the India Security Press in Nasik, these
notes consist of Indian note plates engraved with the words GOVERNMENT OF PAKISTAN in English
and “Hukumat-e-Pakistan” in Urdu added at the top and bottom, respectively, of the
watermark area on the front only; the signatures on these notes remain those of Indian banking
and finance officials. Regular government issues commenced in 1948
in denominations of 1, 5, 10 and 100 rupees. The government continued to issue 1 rupee
notes until the 1980s but other note issuing was taken over by the State Bank in 1953,
when 2, 5, 10 and 100 rupees notes were issued. Only a few 2 rupees notes were issued. 50
rupees notes were added in 1957, with 2 rupees notes reintroduced in 1985. In 1986, 500 rupees
notes were introduced, followed by 1000 rupees the next year. 2 and 5 rupees notes were replaced
by coins in 1998 and 2002. 20 rupee notes were added in 2005, followed by 5000 rupees
in 2006. Until 1971, Pakistani banknotes were bilingual, featuring Bengali translation of
the Urdu text, since Bengali was the state language of East Pakistan.
All banknotes other than the 1 and 2 rupees feature a portrait of Muhammad Ali Jinnah
on the obverse along with writing in Urdu. The reverses of the banknotes vary in design
and have English text. The only Urdu text found on the reverse is the Urdu translation
of the Prophetic Hadith, "Seeking honest livelihood is worship of God." which is حصول رزق
حلال عبادت ہے. The banknotes vary in size and colour, with
larger denominations being longer than smaller ones. All contain multiple colours. However,
each denomination does have one colour which predominates. All banknotes feature a watermark
for security purposes. On the larger denomination notes, the watermark is a picture of Jinnah,
while on smaller notes, it is a crescent and star. Different types of security threads
are also present in each banknote. The State Bank has started a new series of
banknotes, phasing out the older designs for new, more secure ones.
(*Recently the State Bank revised the ₨ 20 banknote, after complaints of its similarity
to the ₨ 5000, which caused a lot of confusion and financial losses, when people gave out
₨ 5000 notes, thinking them to be ₨ 20 notes)
Hajj banknotes Due to the large number of pilgrims to the
Kingdom of Saudi Arabia during the 1950s, the State Bank of Pakistan provided simple
exchange facilities for Hajj pilgrims. The issue of special notes for the express use
of the pilgrims was introduced. Although other means of exchange were considered, the high
level of illiteracy amongst the Pakistani pilgrims and the additional costs that would
be incurred through the need to purchase such means prevented the government from these
methods of exchange. The State Bank Order to allow the issue of these "Hajj notes" was
made in May 1950. The use of Hajj notes continued until 1978.
Until this date, stocks of notes were used without the necessity of printing new notes
with the signatures of the later Governors. It is believed that, once the use of Hajj
Notes was discontinued, most of the remaining stock of notes was destroyed. However, a large
quantity of notes did find their way into the collector market following their sale
to a bank note dealer by the State Bank of Pakistan.
Special banknote Exchange rate
The Rupee was pegged to the British Pound until 1982, when the government of General
Zia-ul-Haq changed it to managed float. As a result, the rupee devalued by 38.5% between
1982/83 and 1987/88 and the cost of importing raw material increased rapidly, causing huge
pressure on Pakistan finances and damaging much of the industrial base built up by the
government of Zulfikar Ali Bhutto. The Pakistani rupee depreciated against the US dollar until
the turn of the century, when Pakistan's large current-account surplus pushed the value of
the rupee up versus the dollar. Pakistan's central bank then stabilised the exchange
rate by lowering interest rates and buying dollars, in order to preserve the country's
export competitiveness. The year 2008 has been termed a disastrous year for the rupee
after the elections and until August 2008 it had lost 23% of its value since December,
2007 to a record low of 79.2 against US Dollar. The major reasons for this depreciation a
huge current and trade accounts deficits had been built up since the credit boom in Pakistan
post 2002. Due to rising militancy in the NWFP and FATA areas FDI began to fall and
the structural problems of the balance of payment where exposed, a disastrous situation
occurred where Foreign Reserves fell to as low as $2 billion. However by February 2011
Forex reserves had recovered at set a new record of $17 billion. Of that $17 billion,
more than $10 billion is borrowed money with interest applicable.
See also
Economy of Pakistan Notes
External links SBP's webpage on the newnotes
Business Recorder: Pakistan's first financial newspaper
State Bank to issue Rs.5000/- and New Rs.10/- Banknotes from 27 May 2006: Governor
The Haj Notes of Pakistan Haseeb Naz's collection on coins used in Pakistan