The Pakistani Rupee's 77-Year Battle Against the Dollar: From Peg to Freefall

When Pakistan gained independence in 1947, the rupee held a commanding position against the dollar at just 3.31 PKR per USD. For nearly a decade, this exchange rate remained locked in place—a testament to the country’s initial economic stability and the fixed exchange rate regime that governed the early post-independence period. Throughout 1947-1954, the rate stayed frozen at 3.31, reflecting a policy of monetary rigidity.

The First Crack: 1955-1960s

The first meaningful devaluation came in 1955, when the rate shifted to 3.91 PKR per dollar, followed by a steeper adjustment to 4.76 PKR in 1956. This level held remarkably steady for over a decade—from 1956 through 1971—suggesting a prolonged period of exchange rate management. But this stability was illusory.

The 1972 Shock and Stagflation Era

The watershed moment arrived in 1972, when the rate jumped dramatically to 11.01 PKR per dollar, nearly tripling in a single year. This represented the end of Bretton Woods and Pakistan’s pivot toward a more market-responsive currency mechanism. The rate then settled around 9.99-10.00 PKR for most of the 1970s and 1980s, though inflation was quietly eroding the rupee’s purchasing power.

The Acceleration Begins: 1989-2007

From 1989 onward, the depreciation accelerated. The rate moved from 20.54 PKR in 1989 to 23.80 by 1991 to 31.64 by 1995—marking a clear inflationary trend. By 2007, before the global financial crisis, the dollar had already climbed to 60.83 PKR.

The 2008 Crisis and Beyond

The year 2008 proved pivotal for Pakistan’s currency. As the global financial crisis unfolded, the rupee weakened sharply to 81.18 PKR per dollar—a 33% jump from the previous year. This wasn’t coincidental; Pakistan faced a severe balance-of-payments crisis, political instability, and an International Monetary Fund bailout. The currency continued bleeding value through the following years: 84.10 in 2009, 85.75 in 2010, and 88.60 by 2011.

The Recent Collapse: 2012-2024

The deterioration only accelerated. By 2013, the rate had surged to 107.29 PKR per dollar. The years 2018-2020 saw another sharp leg down—from 139.21 in 2018 to 168.88 by 2020. Then came the dramatic 2022-2024 period: the rate exploded to 240.00 PKR in 2022 and peaked at 286.00 in 2023, though it slightly recovered to 277.00 by 2024.

The Bigger Picture

In just 77 years, the Pakistani rupee has depreciated from 3.31 to 277.00 PKR per dollar—a staggering 8,400% loss in nominal value. The 2008 financial crisis marked a turning point where annual depreciation accelerated significantly. What began as a stable, managed peg evolved into a currency under severe pressure, reflecting decades of inflation, external imbalances, and economic mismanagement. The rupee’s journey against the dollar tells the story of Pakistan’s broader macroeconomic struggles.