5 Historic Times when the Currency Collapsed in Pakistan
Currency value acts as a thermometer for a country’s economic health. When a nation faces fiscal mismanagement, political unrest, trade deficits, or external debt, its currency can weaken rapidly. This affects imports, inflation, and the livelihoods of citizens. In Pakistan, the rupee has weathered multiple storms, some gradual, others abrupt. Here’s a look at five historic currency collapses in Pakistan, how they happened, and what they signified for the nation’s economy and future. 1. First Major Devaluation – 1972 Following the secession of East Pakistan (now Bangladesh) and the aftermath of the 1971 war with India, Pakistan devalued its currency to stabilize foreign exchange reserves and appease international donors. Year of Collapse : 1972 Value From : PKR 4.76 = 1 USD Value To : PKR 11.00 = 1 USD Reason for Collapse : Loss of economic strength post-1971 war Weak exports and shrinking foreign reserves Pressure from the IMF and World Bank to adjust the exchange rate 2. ...