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Pakistani rupee

Introduction

The Pakistani rupee (Urdu : ) (sign : or ; code : PKR) is the official currencyof Pakistan . The issuance of the currency is controlled by the State Bank of Pakistan , thecentral bank of the country. The most commonly used symbol for the rupee is Rs, usedon receipts when purchasing goods and services. In Pakistan, the rupee is referred to asthe "rupees", "rupaya" or "rupaye". As standard in Pakistani English , large values of rupees are counted in terms of thousands, lakh (100 thousand) and crore (10 million).

History

The word rpiya is derived form Sanskrit word rpya , which means "wrought silver, acoin of silver" ,[2] in origin an adjective meaning "shapely", with a more specific meaningof "stamped, impressed", whence "coin". It is derived from the noun rpa "shape,likeness, image". Rpaya was used to denote the coin introduced by Sher ShahSuri during his reign from 1540 to 1545 CE.

The Pakistani rupee was put into circulation in Pakistan after the dissolution of theBritish Raj in 1947. Initially, Pakistan used Indian coins and notes simply over-stampedwith "Pakistan". New coins and banknotes were issued in 1948. Like the Indian rupee , itwas originally divided into 16 annas , each of 4 pice or 12 pie . The currency was

decimalised on 1 January 1961, with the rupee subdivided into 100 pice, renamed (inEnglish) paise (singular paisa ) later the same year. However, coins denominated in paisehave not been issued since 1994.

Major events

In 1948, coins were introduced in denominations of 1 pice, , 1 and 2 annas, , and 1rupee. 1 pie coins were added in 1951. In 1961, coins for 1, 5 and 10 pice were issued,followed later the same year by 1 paisa, 5 and 10 paise coins. In 1963, 10 and 25 paisecoins were introduced, followed by 2 paise the next year. 1 rupee coins were

reintroduced in 1979, followed by 2 rupees in 1998 and 5 rupees in 2002. 2 paise coinswere last minted in 1976, with 1 paisa coins ceasing production in 1979. The 5, 10, 25and 50 paise all ceased production in 1996. . This is noted by very few people. The oneand two rupee coins were changed to aluminium in 2007 [3]

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CURRENT VALUATION IN BOP SITUATION

rupee

The basic unit of currency is the Rupee , ISO code PKR and abbreviated Rs, which isdivided into 100 paisas. Currently the newly printed 5,000 rupee note is the largestdenomination in circulation. Recently the SBP has introduced all new design notes of Rs.5, 10, 20, 50, 100, 500, 1000, and 5000 denomination, while the design work of Rs.10,000 note is in progress which will help the banking industry in keeping few notesin saving accounts. The new notes have been designed using the euro technology andare made in eye-catching bright colours and bold, stylish designs.

Dollar-Rupee exchange rate

The Pakistani Rupee was pegged to the Pound sterling until 1982, when the governmentof General Zia-ul-Haq , changed it to managed float . As a result, the rupee devalued by38.5% between 1982/83 many of the industries built by his predecessor suffered with ahuge surge in import costs. After years of appreciation under Zulfikar Ali Bhutto anddespite huge increases in foreign aid the Rupee depreciated.

BOP SITUATION Foreign exchange ratePakistan maintains foreign reserves with State Bank of Pakistan. The currency of the reserveswas solely US dollar incurring speculated losses after the Dollar prices fell during 2005, forcingthe then Governor SBP Ishrat Hussain to step down. In the same year the SBP issued anofficial statement proclaiming diversification of reserves in currencies including Euro and Yen,withholding ratio of diversification.

In October 2007, at the end of Prime Minister Shaukat Azizs tenure, Pakistan raised back itsForeign Reserves to $16.4 billion. Pakistan's trade deficit was at $13 billion, exports grew to $18billion, revenue generation increased to become $13 billion and the country attracted foreigninvestment of $8.4 billion. [citation needed ]. However, following the internaltional credit crisis andspikes in crude oil prices Pakistan's economy could not withstand the pressure and on October 11, 2008 State Bank of Pakistan reported that country's foreign exchange reserves had gonedown by $571.9 Million to $7749.7 Million .[49] The foreign exchange reserves had declined moreby $10 billion to an alarming rate of $6.59 billion.

In July 2011, the State Bank of Pakistan reported reserves to hit an all-time high of $18.25billion.

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The economy of the Islamic Republic of Pakistan is suffering with high inflation rates well above26%. Over 1,081 patent applications were filed by non-resident Pakistanis in 2004 revealing anew-found confidence .[50] Agriculture accounted for about 53% of GDP in 1947. While per-capitaagricultural output has grown since then, it has been outpaced by the growth of the non-agricultural sectors, and the share of agriculture has dropped to roughly one-fifth of Pakistan's

economy.

In recent years, the country has seen rapid growth in industries

(such as apparel, textiles, and cement) and services (such as

telecommunications, transportation, advertising, and finance).

Balance of payment :- pakistan faced severe economicconditions such as energy crisis andlarge costs to exports but even

tough its external sector experienced anoverall improvement in

2009 to 10 the external current account deficitscontracted to around

2.8% of GDP, the reasons were as follows:1) a sharp narrowing of

the currentaccount deficit which more than offset the declining

financial accountsurplus during the period.2) macroeconomic

stabilization measures taken by the government3) back of a steep

decline in imports for much ofthe year, improving exports as world

demand is gradually restored, anda continued increase in

workerRemittances4) Worker remittanceshave increased from US$

6.4 billion in July April 2008 09 to US$ 7.3billion in ten months5)

recent increase in remittances, which appears to be secular

innature, has emanated from a policy initiative called

PakistanRemittance Initiative (PRI).6) the collapse in global

commodity prices induced by theEurozone widecontagion from the

ongoing Greek debt crisis. SUMMARY OF BALANCE OF

PAYMENTSPakistans Current Account Deficit (CAD) narrowed down by

$3.06 billion in July April2009 10 as against $ 8.98 billion last year This

decline in CAD during 2010 was contributedby the improvement in trade,services, income & current transfers during the period. SUMMARY

BALANCE OF 10,000 PAYMENTS 5,000 CURREN T 0 ACCOUN 2008

2009 2010 T -5,000 BALANCE -10,000 -15,000

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24. REASONS TO DECLINE IN CURRENT A/C BALANCE:Fall in

payments on account of repatriation ofdividends,interest on debt,freight

on merchandise imports &lower outflows fromforeign exchange

companies.DECLINE IN FINACIAL A/C:Decline in financial account

surplus, which emerged in2008, continued in July April 2009-10 the deficit

in thefinancial account is attributed to lower loan inflows,foreign investors

risk & amid global crisis The majorsectors that recorded decline included

communication,financial business and oil & gas exploration.

25. CAMPARISONDecline in trade deficit is due mainly to a fall in imports

complimented by overall improvementin Exports during July April 2009 10.

The improvement in income account is based on a declinein investment

income outflows & fall in net interest payments .The increase in services

exports ismainly led by communication, financial, government and other

business services. Lower passage& freight earnings and reduced local

operations of foreign transport companies remained thekey factors behind

the overall decline in the transportation services exports. CAPITAL &

FINANCIALCURRENT ACCOUNT ACCOUNT BALANCE TRADE

BALANCE 4% 6% CAPITAL ACCOUNT SERVICE BALANCE FINANCIA

44% 37% L INCOME ACCOUNT ACCOUNT BALANCE 90% NET 11%

ERRORS & 8% CURRENT OMISSION TRANSFER S NET

CENTRAL BANK OVERVIEW OF PAKISTA

The State Bank of Pakistan (SBP) (Urdu :) is the central bank of Pakistan . While its constitution, asoriginally laid down in the State Bank of Pakistan Order 1948, remained basically unchanged untilJanuary 1, 1974, when the bank was nationalized, the scope of its functions was considerably enlarged.The State Bank of Pakistan Act 1956 ,[1] with subsequent amendments, forms the basis of its operationstoday. The headquarters are located in the financial capital of Pakistan, Karachi with its secondheadquarters in the capital, Islamabad .

The principal officer of the SBP is the Governor . The current Governor of State Bank of Pakistan is Yaseen Anwar. The Central Board consists of nine members: the Governor (who is Chairman), theSecretary, Finance Division, Government of Pakistan and seven Directors, including one Director fromeach Province, to be nominated by the Federal Government ensuring representation to agriculture,banking and industrial sectors. The Directors are appointed for terms of up to three years.

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1. Chairman: ( Governor SBP)2. Dr. Waqar Masood Khan (Secretary Finance).