Generation Z would find it difficult to believe that only a few years ago, Pakistanis could buy US dollars for as cheap as Rs 25. In the last 30 years, the value of the Pakistani rupee in relation to the US dollar has fallen by almost 100 times, or 948%.
When the fall of the rupee is plotted on a graph and contrasted with the value of the Indian rupee, as we have done here, it is evident what went wrong in Pakistan and how the generation currently in its prime may avoid repeating the same mistakes committed over the preceding three decades.
The Problem First Appeared Between 1950 And 1971
According to Professor Werner Antweiler of the University of British Columbia, the US dollar was worth 3.3 Pakistani rupees (PKR) and 4.76 Indian rupees in the 1950s (INR).
As a result, the Indian rupee was almost 70% weaker than Pakistan’s currency.
However, the Pakistani rupee’s dominance over the Indian rupee lasted only until 1956, when the currencies were equalised and both Pakistan and India enjoyed equal access to the US dollar at the same rate, or 4.7.
Pakistan became a republic in 1956, when it adopted its first constitution. Nonetheless, political turmoil was on the rise, and the country was on its way to its first martial law, which was established in October 1998.
The situation was no better for Indians. Their currency fell during the 1965 war with Pakistan. Prior to the 1971 war, the US dollar was valued PKR4.76 and INR7.49.
Afghans Between 1971 And 1991
Following the fall of Dhaka, the PKR’s value in comparison to the US dollar and INR fell. Despite a steady influx of funds to Pakistan during the Afghan Jihad, the Indian rupee beat the Pakistani rupee until 1991. Even the Western media referred to it as Jihad at the time.
In 1988, when General Ziaul Haq died in an aeroplane crash, the US dollar was valued PKR 18 and INR 13.91.
Things began to change once Benazir Bhutto was elected president. In 1991, the Pakistani rupee was worth PKR23.8 and the Indian rupee was worth INR22.74, with the Indian currency being 4% stronger.
The Pakistani rupee did not outperform the Indian rupee until 1992. The US dollar was worth PKR25.08 and INR25.91 at the time.
Before And After Nuclear Explosions of 1992-1999
Pakistani historians and political scientists usually refer to the 1990s as the country’s “lost decade,” blaming the country’s financial difficulties on politicians’ inability to collaborate on major national matters such as the economy.
The lines on our bar that represent the PKR and INR exchange rates appear to confirm this idea.
Despite the fact that two civilian governments were unable to complete their mandates, the rupee rose versus the Indian rupee in 1993 and remained there until 1997. At this moment, the PPP and PMLN collaborated to abolish Pakistan’s disputed 8th Amendment.
When Nawaz Sharif gained a nearly two-thirds majority in the 1997 election, everything changed. The heavy-handedness of a hefty mandate substituted political discourse. As the level of disturbance grew, so did the value of the US dollar and the Indian rupee in relation to the Pakistani rupee.
Nawaz Sharif rose to power while opposition leader Benazir Bhutto was in self-imposed exile, and he was rumoured to be considering taking the moniker Amirul Momeen (the leader of the Muslims).
Pakistan conducted nuclear tests in May 1998, resulting in a similar foreign currency crisis to the one we just experienced this month (January 2023). As a result of international sanctions, India faced the same predicament as both countries.
However, a few months after Pervez Musharraf’s takeover in October 1999, Pakistan’s situation deteriorated as the civilian leadership was exiled, leading to international isolation.
A Fresh Afghan Conflict And Availability of Dollars 2001-2008
The dollar rose to Rs63 only a few months before the September 11 attacks in the United States, as the Musharraf government sought international backing for its October 1999 decision.
Pakistan was thrust back into the limelight following 9/11 and the declaration of a “War on Terror” by the United States. The dollar’s surge was halted right then and then.
During Musharraf’s final seven years in power, Pakistan maintained a steady exchange rate of around Rs60.
Following a disagreement with the top judge, Justice Iftikhar Chaudhry, Musharraf imposed a state of emergency in November 2007. The situation got unstable as a result of widespread protests by legal experts. In Pakistan, the value of the US dollar grew to Rs68, compared to the unchanged value of the Indian rupee.
In order to reestablish stability, Musharraf met with Benazir Bhutto and agreed to allow the Sharifs to return.
Previous Parties Reuniting 2009-2018
Elections resulted in the reinstatement of a civilian administration, albeit it would take several years to stabilise the nation, the economy, and the rupee.
At this moment, the new exchange rate was PKR 80.
When Osama Bin Laden was killed in Abbottabad in May 2011, the United States said that it had achieved a significant aim in its war against terrorism. It was preparing to leave the region. Obama declared a military withdrawal from Afghanistan.
The United States and NATO stopped military operations in Afghanistan in December 2014.
The existing funds would be depleted.
Pakistan desperately needs to find new sources of income, such as exports. However, we never developed any products or services that could have generated enough revenue from the rest of the world.
Between the Abbottabad operation and Nawaz Sharif’s disqualification in July 2017, the value of the US dollar rose from PKR86 to PKR105. The Pakistani rupee moved in tandem with the Indian rupee. As a result, Pakistan’s performance may be compared to India’s.
There seems to be an increase between Sharif’s resignation and the national elections in July 2018. The value of the US dollar jumped from PKR105 to PKR121.
Imran Khan’s Four-Year Tenure Runs From 2018 To 2022
Between 2013 and 2016, Pakistan completed only one of 22 IMF projects under Nawaz Sharif. However, the nation was put on autopilot following the Panama Leaks case, notably Sharif’s dismissal, and the economy soon collapsed.
When Imran Khan gained government, new IMF programmes were required. Asad Umar, Khan’s first finance minister, approached the Fund with caution. The loan was approved after Umar was removed.
Khan waited till the US dollar rose to PKR163 per Pakistani rupee.
The IMF programme aided in economic stabilisation, while the “one-page” slogan, which provided uncommon agreement between civilian and military authorities, secured political stability.
In 2021, the Pakistani rupee increased somewhat. The currency rate fell from Rs167 in June 2020 to Rs157 in June 2021. But after a few months, it began to rise again.
As turmoil returned to the country, the dollar rose even further. When Imran Khan was deposed on April 9, it was trading at PKR184.
The Same People Are Back April 2022 – present
The removal of President Imran Khan lifted the currency’s value for just ten days, hitting PKR 180.64 on April 14, 2022, until the USD dollar resumed trading at PKR185 on April 20.
Imran Khan continued in politics after being deposed, defying any expectations that may have been held. Even when the live broadcast of his statements was prohibited in recent weeks, he continued to spread his narrative through protests, daily press conferences, and even video addresses.
This, however, exacerbates the instability.
It is doubtful that our currency will stabilise until the nation’s political parties can reach an accord. This may be achieved through political talks, as we saw briefly in the early 1990s, or by adopting yet another autocrat’s “same page” worldview and rule.