Worst Decline In Pakistani Rupee In 2021

The Pakistani rupee has been facing a downfall against US dollars since 2008 but the year 2019 and 2020 were the worst. In 2019 it went to 10% lower is a record-breaking low as compared to the past which was about 20% low. It is because of the economic battle between current accounts and trade balances in the country. On 1st January 2021, it was about 159.8 and it rose to 176.5 rupees per dollar. The condition prevailed till May after which there came a notable decline. In the year 2021, with the rise of coronavirus, the global economy finally reopened. However many countries suffered great economic losses including Pakistan.  

Talking about the macroeconomic front, the current accounts had a maximum at the beginning of the year in Pakistan. But as the economy started to get better the increased import bill came up bringing it back to decline. The trade deficit enhanced exerting more pressure on the currency. According to the state bank of Pakistan, trade marketing has been fluctuating greatly, or to put it the other way it can be said that the Pakistani currency is losing its power as compared to the dollar. 

Also when the currency rates have gone down the export rates have increased. However, the import rate is a great burden for the country. The worsening situation of external accounts and rising pressure on the foreign currency accounts brought a further decline in the worth of currency. The deficiency in accounts presided over the year with the prices of goods increasing tremendously especially of the oil. According to Saad Hashmey, the fall in Pakistani currency during the last six months is due to an increase in the prices of oil globally.  

As far as numbers, Pakistan's present record showed a decline in July and November of about $7.1 billion. Against an overflow of $1.9 billion recorded in the earlier year. Pakistan's CAD extended to $1.91 billion from $1.76 billion in October 2021 to November. The import bill of Pakistan has increased from August. After the change in Afghanistan’s situation, the rate of dollars has suddenly reached the sky making the Pakistani currency more worthless than ever. 

The consumer price index also shifted to 12% in December due to a decrease in Rupee. The interest rate has also risen more than ever up to 275 basis points and is expected to rise about 9% by the end of the year. Also, foreign exchange has been banned by SBP and also fixed a certain amount per person like about 10,000 dollars. People who traveled to Afghanistan also faced many restrictions like carrying 1000 dollars for each person. The annual limit was fixed to 6000 dollars. It adversely affected Pakistani currency. 

Pakistan received three billion dollars from Saudi Arabia to support the economy. The international monetary fund (IMF), received about 2.8 billion dollars. It made the situation poor for the economy and currency.