PKR (Pakistani Rupee)

DEFINITION of 'PKR (Pakistani Rupee)'

The PKR is the currency abbreviation or currency symbol for the Pakistani rupee, the currency of Pakistan. The Pakistani rupee is made up of 100 paisa and is often represented by the symbol Rp.

It is often referred to as rupees, rupaya, or rupaye.

BREAKING DOWN 'PKR (Pakistani Rupee)'

When Pakistan became independent from Britain in 1947, the Pakistani rupee replaced the Indian rupee. Initially, they remained using the British notes and simply stamped "Pakistan" over them until printing their own notes the following year. 

The rupee was decimalized in 1961, replacing the 16 annas that the rupee was originally divided into with 100 paisa.

Initially, the rupee was pegged to the British pound. However, in 1982, the government adopted a managed float policy that caused financial mayhem. For the next five years, the rupee fell nearly 40% against the British pound, and the cost of imports surged, crippling the already fragile economy. The currency remained under pressure until the turn of the century when the State bank of Pakistan finally lowered interest rates and purchased U.S. dollars to curb the falling value of the currency. 

Like most emerging market currencies, the Pakistani rupee plunged during the financial crisis, losing over 20% against the U.S. dollar in 2008. The fall of the rupee was exasperated by its large current account deficit. 

Because of the fragility and volatility of its economy, the Pakistani rupee does not have any strong correlations with other currencies, financials or commodities.