Under Imran Khan’s administration, the Pakistani rupee falls to a record low and depreciates 30.5 percent against the US dollar

Islamabad, – Under Pakistan Prime Minister Imran Khan’s current administration, the Pakistani rupee has depreciated by 30.5 percent against the US dollar in the last three years and four months. 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 30.5 percent drop in the last 40 months. This is one of the largest currency depreciations in the country’s history.

Notably, the only other higher devaluation occurred following the fall of Dhaka, when Pakistan’s currency was devalued by 58% against the USD in 1971-72, from Rs 4.60 to Rs 11.10. Former economic adviser Dr. Ashfaque Hassan Khan stated that economic policymaking had completely broken down because the country’s fiscal policy had become subservient to monetary and exchange rate policies. According to The News International, he also stated that monetary tightening and exchange rate depreciation resulted in higher inflation, public debt, and debt servicing.

In the case of Pakistan, empirical evidence showed that a 1% monetary tightening increased inflationary pressures by 1.3%. Experts believe that the massive currency depreciation under Imran Khan’s administration fueled inflationary pressures. According to the report, they believe that the 30.5 percent depreciation of the currency resulted in higher inflation.