ISLAMABAD (Pakistan): The Pakistani rupee has depreciated by 30.5 per cent against the US dollar in the last three years and four months under the current government of Pakistan Prime Minister Imran Khan.
According to The News International, the value of the Pakistani rupee has fallen from Rs 123 against the USD in August 2018 to Rs 177 against the USD in December 2021, a decline of 30.5 per cent in the last 40 months. This makes it one of the highest devaluations of the currency in the history of the country.
Notably, the only other high devaluation occurred after the fall of Dhaka, and Pakistan’s currency was devalued by 58 percent from Rs 4.60 to Rs 11.10 against the US dollar in 1971–72.
Former Economic Adviser Dr Ashfaq Hassan Khan said that economic policy making has completely collapsed as the country’s fiscal policy has become subservient to monetary and exchange rate policies. He further stated that monetary tightening and exchange rate depreciation resulted in higher inflation, public debt and debt servicing, The News International reported.
Empirical evidence shows that one per cent monetary tightening increased inflationary pressures by 1.3 per cent in the case of Pakistan. Experts are of the opinion that the massive devaluation of the currency under the Imran Khan government fueled inflationary pressures. The report said that they believe a 30.5 per cent fall in the exchange rate has led to inflation.