Monday , July 4 2022

Reasons for Devaluation of Pakistani Rupee

Economy of any state is being judged by the strength and stability of the country, the weakness and the instability of the currency has direct impact on the success and development of any state. Pakistan is one of those countries which are facing this threatening problem in which the national currency is continuously losing its worth and value in the international market. There are so many reasons which have laid the foundations for this problem in Pakistan.

Pakistan is already shattered with the war against terror, energy crisis, hyperinflation, and political instability and the horrible floods and earthquakes which have displaced and left 20 million of people helpless. Until or unless the production of the country will not rise the economy of the state could not be stabilized, but unfortunately due to the various natural disasters vast areas of cultivated land has being destroyed, and Pakistan being an agro based country has to suffer due to this loss and damage.

Reasons for Devaluation of Pakistani Rupee

Reasons for Devaluation of Pakistani Rupee

One of the crucial reasons behind the devaluation of money in Pakistan is because of high inflation in the country. Due to immense inflation the State Bank of Pakistan has felt the urgency of issuing more currency and notes in the local public and commercial sectors to meet up the high inflation, but the national bank of any state cant issue notes and currency until or unless they have the equal amount of reserves of Precious Metals which includes Gold and Silver. Pakistan does not have such high reserves of precious metals so they can’t issue worthy and high value currency. Due to this reason the only possible solution for this query is that they have reduced the worth of the currency and can dispatch high quantity notes and currency which international value is not that much high.

Such high values of loans and debt has also played its role in the devaluation of the national currency of Pakistan. The International currency is getting stronger and stronger and the hub is the Dollar which has reached its record value in the last decade or so. The negative balance of payment which means the deficit is the budget that makes the value of import more than the value of export has also contributed in the devaluation of Pakistani rupee and with the same time immense and high unemployment has made the scenario worse for Pakistan. To improve the value of the currency the economy of the state should get improved and the financial budgeting should be made in positive balance of payments.

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