How Pakistan's Dollar Price Surged in 2018: A 77-Year Currency Journey

Pakistan’s relationship with the dollar price has been a rollercoaster spanning more than seven decades. Since independence in 1947, the currency has undergone dramatic transformations, with 2018 marking a particularly pivotal moment in this long financial history. What began as a stable dollar price of 3.31 PKR has evolved into a complex story of economic pressures, inflation, and devaluation that tell the broader narrative of Pakistan’s economic struggles.

Decades of Stability: The Fixed Exchange Rate Era (1947-1970s)

The early years of Pakistan’s independence saw remarkable currency stability. Throughout the 1950s and most of the 1960s, the dollar price remained virtually unchanged at 3.31 PKR—a testament to fixed exchange rate policies that characterized this era. This stability persisted until 1955, when a modest adjustment pushed the rate to 3.91 PKR, followed by a more significant shift to 4.76 PKR by 1956. Remarkably, this dollar price held firm at 4.76 PKR for an entire decade, from 1956 through the early 1970s, providing businesses and citizens with predictable currency values.

The Beginning of Volatility: The 1970s-1980s Transition

The early 1970s brought the first major shock to Pakistan’s dollar price stability. By 1972, the rate jumped to 11.01 PKR—nearly tripling within a single year. This dramatic movement reflected broader economic headwinds and policy shifts. The subsequent years saw the dollar price settling around 9.99-10 PKR through the 1970s and early 1980s, creating a new but still relatively stable band.

Acceleration Phase: The 1990s Devaluation

The 1990s witnessed the dollar price beginning its relentless climb. Starting from around 20.54 PKR in 1989, the currency entered a phase of steady depreciation. Each year brought noticeable increases: 23.80 PKR in 1991, 30.57 PKR by 1994, and 51.90 PKR by 1999. This decade marked the transition from stability to persistent weakness in Pakistan’s currency against the dollar.

The Critical Juncture: 2018 Dollar Price Explosion

By 2018, Pakistan’s economic challenges reached a crescendo, with the dollar price reaching 139.21 PKR—representing a staggering 41.11 PKR increase since 2017 alone. This 2018 surge signaled major currency stress, driven by growing fiscal deficits, external account pressures, and capital outflows. The dollar price in 2018 essentially reflected the intensifying economic crisis that would eventually lead to an IMF bailout program.

The Continuous Decline: 2019-2024

The deterioration accelerated further in subsequent years. By 2019, the dollar price had climbed to 163.75 PKR, and by 2020, it reached 168.88 PKR. The year 2022 witnessed another dramatic shift, with the dollar price reaching 240.00 PKR. As of 2024, while the rate has slightly moderated to 277.00 PKR, this represents a long-term depreciation of nearly 8,400% since Pakistan’s independence—a sobering reminder of the currency’s sustained weakness.

What the 77-Year Trend Reveals About Pakistan’s Economy

The journey of the dollar price from 3.31 PKR to 277 PKR tells a story of economic challenges, inflation, and structural vulnerabilities. The 2018 acceleration was particularly significant, as it coincided with Pakistan’s external account crisis and highlighted the vulnerability of the Pakistani rupee in the face of macroeconomic imbalances. Understanding this historical trajectory of dollar price movements provides crucial context for analyzing current economic policies and future currency stability in Pakistan.